DEFIANCE KNITTING INDUSTRIES PVT. LTD. v. JAY ARTS
2006-08-30
ARIJIT PASAYAT, LOKESHWAR SINGH PANTA
body2006
DigiLaw.ai
JUDGMENT ARIJIT PASA YAT, J.: - Leave granted. 2. Challenge in this appeal is to the judgment rendered by a learned Single Judge of the Bombay High Court dismissing the Writ Petition No. 2521 of 2005 filed by the appellant. By the impugned judgment the High Court upheld the view of the trial Court in Summary Suit No. 10 of 2001 that the appellant has not made out a case for unconditional leave to defend in terms of Order XXXVII, Rule 2 of the Code of Civil Procedure, 1908, (in short the CPC). 3. The factual background in a nutshell are as follows: Summary Suit No. 10 of 2001 has been filed by the respondent before the learned Civil Judge (Senior Division) at Kalyan for recovery of an amount of Rs. 98,81,426.63. In addition, the plaintiff has claimed interest from the date of filing of the suit till the realisation of the amount. The suit was filed on 5 -7 -2001. After issuing notice, the writ petitioner -defendant filed an application under Order XXXVII, Rule 3(5) of Civil Procedure Code for leave to defend unconditionally and the said application was rejected by the trial Court. The writ petitioner, therefore, approached the High Court in Civil Revision Application No. 659 of 2002 and in terms of the consent orders, it was disposed of on 2 -52002. The said order was to the effect that the writ petitioner was to deposit an amount of Rs. 20,00,000/ - with the trial Court within four months to show his bona fides and was entitled to take out an application for leave to defend which was required to be heard on merits. If he succeeded in his application for leave to defend, he was allowed to withdraw the amount deposited. The trial Court hear the parties afresh and by order dated 11 -3 -2005 allowed the application (Ex. 34 on the condition that the writ petitioner was to deposit an additional amount of Rs. 50,00,000/ - in two instalments. The said order was challenged before the High Court. 4. Before the High Court, by referring to the numerous correspondence between the parties right from 5 -11 -1997 onwards, writ petitioner submitted that the summary suit raised several disputed questions which needed trial and at n point of time, the writ petitioner had accepted the claim made by the plaintiff.
The said order was challenged before the High Court. 4. Before the High Court, by referring to the numerous correspondence between the parties right from 5 -11 -1997 onwards, writ petitioner submitted that the summary suit raised several disputed questions which needed trial and at n point of time, the writ petitioner had accepted the claim made by the plaintiff. It was also pointed out that the writ petitioner had taken up the issue with its Architect and all the bills submitted by the plaintiff were returned to the Architect. Thus, the writ petitioner had not accepted the payments as claimed by the plaintiff. It was further submitted that the trial Court failed to give prop reasonings and a cryptic order has been passed rejecting the application for leave to defend unconditionally. 5. The High Court noted that after issuing notice in the trial Court, the defendant has not filed its written statement. In the application, the defendant has disputed the contents and in fact denied the claim made by the plaintiff. However, the plaintiff has set out its case to point out that the work as per the tender was completed some times in March, 1999, the final bills submitted by it were certified by the Architect of the defendant and certificate to that effect was issued on 19 -4 -1999. The Architect had forwarded the bills to the defendant for clearance and the final bill amount was Rs. 2,07,11,475/ -, out of which, a amount of Rs. 1,08,29,989/ - was received. The correspondences brought on record show that the meeting was held between the parties and the issue regarding incomplete work, payments and final settlement were discussed by them in the meeting as is clear from the letter addressed by the writ petition dated 20 -11 -1998 to its Architect Mr. Qutub Mandviwala. Reference was made to possible dates for final discussion and settlement of the dues. During this period, the contractor and the Architect should discuss and settle all the payment etc. after completing the jobs as agreed. 6. According to the High Court, the correspondence thereafter, between the writ petitioner and its Architect goes to show that there were some defective jobs which were to be completed.
During this period, the contractor and the Architect should discuss and settle all the payment etc. after completing the jobs as agreed. 6. According to the High Court, the correspondence thereafter, between the writ petitioner and its Architect goes to show that there were some defective jobs which were to be completed. The final bills submitted by the plaintiff were certified on 19 -4 -1999 by the Architect of the defendant and thereafter, vide letter dated 27 -4 -1999, the defendant took up the issue with its Architect. All this correspondence goes to show that the claim made by the plaintiff is not totally denied and there may be some subtractions in terms of the interest or defective work but there is nothing on record to show that the Architect of the writ petitioner has finally worked out the figure, quantified the payment to be made the plaintiff and in any case less than the amount certified by the said Architect on 19 -4 -1999. 7. The trial Court passed the following order: "After hearing arguments of the parties, I am of the opinion that defendant has no defence, but it is moon shine defence. Therefore, a permission can be granted to leave defence to the deserves to be allowed on condition, I pass the following order :_ 1. The application Exh. 34 is allowed for leave to defence to the defendant on following conditions ; - (i) The defendant shall deposit an amount of entire Rs. 50 Lacs in the Court in a two instalments on or before next date, in addition to earlier deposited amount of Rs. 20 Lacs. 2. Cost shall be cause in the suit". 8. The High Court felt that the trial Court ought to have given proper reasons in support of the impugned order. But it was observed that the correspondences between the parties does show that the application submitted by the writ petitioner could not be allowed and the discretion exercised by the trial Court granting leave to defend conditionally i.e. on total deposit of Rs. 70,00,000/ - cannot be termed to be perverse or totally erroneous. Four years had passed from the filing of the claim before the trial Court and the original claim was Rs. 98,81,426.63/ -. As noted above writ petition was dismissed. 9.
70,00,000/ - cannot be termed to be perverse or totally erroneous. Four years had passed from the filing of the claim before the trial Court and the original claim was Rs. 98,81,426.63/ -. As noted above writ petition was dismissed. 9. Learned counsel for the appellant submitted that both the trial Court and the High Court completely lost sight of the earlier order passed by the High Court which in no uncertain terms laid down that the quantum of deposit to be directed could not be more than Rs. 20,00.000/ -. Without noticing these relevant aspects, the trial Court directed deposit of Rs. 70,00,000/ - and High Court upheld it. 10. Per contra, learned counsel for the respondent submitted that even according to the correspondences and the statements filed by the appellant the admitted amount was more than Rs. 90,00,000/ - and, therefore, after taking note of the deposit of Rs. 20,00,000/ - made earlier, the trial Court and the High Court had directed deposit of Rs. 50,00,000/ - more. In essence, his submission was that in the earlier order in the Civil Revision the amount to be fixed was let to be decided by the trial Court. 11. Order XXXVII, Rules 2 and 3 so far as relevant reads as follows; 2. Institution of Summary Suits. - (1) A suit, to which this Order applies, may if the plaintiff desires to proceed thereunder, be instituted by presenting a plaint which shall contain, - (a) a specific averments to the effect that the suit is filed under this Order; (b) that no relief, which does not fall within the ambit of this rule, has been claimed in the plaint; and (c) the following inscription, immediately below the number of the suit in the title of the suit, namely (2) The summons of the suit shall be in Form No.4 in Appendix B or in such other form as may, from time to time, be prescribed.
(3) The defendant shall not defend the suit referred to in sub -rule (1) unless he enters an appearance and in default of his entering an appearance the allegations in the plaint shall be deemed to be admitted and the plaintiff shall be entitled to a decree for any sum, not exceeding the sum mentioned in the summons, together with interest at the rate specified, if any, up to the date of the decree and such sum for costs as may be determined by the High Court from time to time by rules made that behalf and such decree may be executed forthwith. 3. Procedure for the appearance of defendant. - (1) In a suit to which this Order applies, the plaintiff shall, together with the summons un Rule 2, serve on the defendant a copy of the plaint and annexures there and the defendant may, at any time within ten days of such service, en an appearance either in person or by pleader and, in either case, he shall file in Court an address for service of notices on him. (2) Unless otherwise orders, all summonses, notices and other judicial processes, required to be served on the defendant, shall be deemed have been duly served on his if they are left at the address given by hi for such service. (3) On the day of entering the appearance, notice of such appearance shall be given by the defendant to the plaintiffs pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice deliver at or sent by a prepaid letter directed to the address of the plaintiff pleader or of the plaintiff, as the case may be.
(5) The defendant may, at any time within ten days from the service 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 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 satisfied that the facts disclosed by the defendant do not indicate that 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 the 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 deposit by the defendant in Court. 12. This Court in Mechalec Engineers and Manufactures vs. Basi Equipment Corporation, AIR 1977 SC 577 has laid down the principles to followed in granting leave to defend the suit under Order XXXVII, Rule 3 of the Code. One of the aforesaid principles is, that if the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. It has also been laid do therein that if the defendant has no defence or the defence set up is illusory 0 sham or practically moonshine then ordinarily the plaintiff is entitled to leave t sign judgment and the defendant is not entitled to leave to defend. 13. While giving leave to defend the suit the Court shall observe the following principles: (a) If the Court is of opinion that the case raises a triable issue then leave to defend should ordinarily be granted unconditionally. See Milkhira (India) Pvt. Ltd. vs. Chaman Lal Bros., AIR 1965 SC 1698 . The question whether the defence raises a triable issue or not has to be ascertained by Court from the pleadings before it and the affidavits of parties.
See Milkhira (India) Pvt. Ltd. vs. Chaman Lal Bros., AIR 1965 SC 1698 . The question whether the defence raises a triable issue or not has to be ascertained by Court from the pleadings before it and the affidavits of parties. (b) If 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 put by the defendant is frivolous or vexatious is may refuse leave to defend altogether. Kiran Mryace Dassi vs. Dr. J. Challrjae, AIR 1949 Ca/. 479. (noted and approved in Mechalecs case (supra). (c) In cases where the Court entertains a genuine doubt on the question as to whether the defence is genuine or sham or whether it raises a triable issue or not, the Court may impose conditions in granting leave to defend. 14. In Mrs. Raj Duggal vs. Ramesh Kumar Bansal, AIR 1990 SC 2218 it as held as follows: "3. Leave is declined where the Court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defences. The test is to see whether the defence raises a real issue and not a sham one, in the sense that if the facts alleged by the defendant are established there would be a good or even a plausible defence on those facts. If the Court is satisfied about that leave must be given. If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based or uncertainty as to the amount actually due or where the alleged facts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross -examine his witnesses leave should not be denied. Where also, the defendant shows that even on a fair probability he has a bona fide defence, he ought to have leave. Summary judgments under order 37 should not be granted where serious conflict as to matter of fact or where any difficulty on issues as to law arises. The Court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency". 15.
Summary judgments under order 37 should not be granted where serious conflict as to matter of fact or where any difficulty on issues as to law arises. The Court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency". 15. In the instant case much would depend upon the effect of the order assed by the High Court in the earlier case i.e. Civil Revision No. 659 of 2002. The operative portion reads as follows: "The applicants in order to establish their bona fides agree and undertake that they shall deposit before the trial Court in amount of Rs. 20 lacs within a period of four months from today. Upon deposit of the aforesaid amount of Rs. 20 lacs by the applicants, the impugned order of the learned Civil Judge, Senior Division, Kalyan dated 7th March, 2002 declining to grant unconditional leave to defend and the consequential decree passed on 8th March, 2002 shall stand quashed and set aside. The learned Trial Judge shall dispose of the summons for Judgment after hearing the parties, uninfluenced by the earlier order dated 7th March, 2002, which is with the consent of the parties quashed and set aside. The learned Trial Judge will proceed to deal with the matter in accordance with the directions as aforesaid and keeping in view the requirements of Order 37 of the Code of Civil Procedure, 1908. In the event that the deposit of an amount of Rs. 20 lac aforesaid is made, it shall be without prejudice to the right of applicants to contend that they are entitled to the grant of unconditional leave to defend the suit. In the event that the learned Trial judge com the conclusion that the applicants are entitled to unconditional leave to defend, the applicants would be at liberty to make an application be the trial Court for refund of the amount which has been deposit them of Rs. 20 lacs, in pursuance of the statement which has been hereinabove, similarly, in the event of leave being granted to defend suit subject to deposit of an amount less than Rs. 20 lacs, the applicant would be at liberty to move an application for the refund of the bal amount of Rs. 20 lacs.
20 lacs, in pursuance of the statement which has been hereinabove, similarly, in the event of leave being granted to defend suit subject to deposit of an amount less than Rs. 20 lacs, the applicant would be at liberty to move an application for the refund of the bal amount of Rs. 20 lacs. The respondents would similarly be at liberty to move an application for the withdrawal of the amounts deposited the application for leave to defend has been disposed of and subject to the outcome of the application." 16. A bare reading of the order shows that the High Court in the ea occasion took the view, on the consent of parties, that Rs. 20,00,000/ - was to deposited and on deposit being made certain follow up action were to be taken. The fact that the High Court wanted the quantum to be pinned at Rs. 20,00, and not more than that is clear from the fad that the High Court directed re in case the trial Court on consideration of merits came to conclusion that amount to be deposited was less than Rs. 20,00,000/ -. There is no indication in case the amount was to be more, then the appellant would pay the differential amount. 17. The stand of the appellant that the maximum deposit that could been directed was fixed at Rs. 20,00,000/ - is on a sound footing. The order of the trial Court as well as that of the High Court cannot be maintained. However a interim measure by order dated 26 -9 -2005 this Court has stayed the operation of the High Courts order subject to deposit of Rs. 20,00,000/ -. It is stated that deposit has already been made. Though we have held the trial Courts order the High Courts order are not sustainable, the amount deposited pursuant to Courts order need not be refunded. The trial Court is directed to proceed the matter and make effort for its expeditious disposal. 18. Appeal is allowed but without any order as to costs.