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2006 DIGILAW 4 (DEL)

PAVITRA SINGH v. UNITEX OVERSEAS PVT LTD

2006-01-02

BADAR DURREZ AHMED

body2006
BADAR DURREZ AHMED, J. ( 1 ) THIS is an application filed on behalf of the defendant under order 37 Rule 3 (5) of the Code of Civil Procedure, 1908 seeking unconditional leave to defend the summary suit filed on behalf of the plaintiff. ( 2 ) THE plaintiff s case is founded upon six cheques which are set out in paragraph 5 of the plaint. The details of the cheques are as under:- Cheque No. Date Bankers Amount 028881 07. 10. 96 American Express Bank 5,00,000/- 028882 14. 10. 96 American Express Bank 5,00,000/- 028883 21. 10. 96 American Express Bank 5,00,000/- 028884 28. 10. 96 American Express Bank 5,00,000/- 028885 05. 11. 96 American Express Bank 5,00,000/- 028886 12. 11. 96 American Express Bank 3,99,057. 75 these cheques are for a total amount of Rs. 28,99,057. 75. According to the plaintiff, in terms of an invoice dated 06. 06. 1996, a copy of which is at page 1 of the documents filed by the plaintiff, the plaintiff had supplied natural silk fabrics of various styles to the defendant. The total value of the invoice was rs. 28,99,057. 75 and the Invoice No. was 005103 dated 06. 06. 1996. The case for the plaintiff is that the aforesaid six cheques were in respect of the payment for the amount covered by the said invoice. These cheques were presented to the plaintiff s banker on 26-27. 03. 1997 but they were returned with the endorsement that the defendant had stopped the payment of these cheques. The suit is founded on the dishonour of the said six cheques. ( 3 ) THE learned counsel for the defendant submitted that the defendant was entitled to unconditional leave. The main plank of his argument was that the goods were shown to have been accepted and received by the defendant on 06. 06. 1996 as per the said invoice dated 06. 06. 1996 but the same could not have been supplied to the defendant inasmuch as the very same goods were the subject matter of Invoice No. UT 96/02 dated 24. 05. 1996 whereby the said goods were consigned to one Triumph-I Pvt. Ltd at Moscow. 06. 1996 as per the said invoice dated 06. 06. 1996 but the same could not have been supplied to the defendant inasmuch as the very same goods were the subject matter of Invoice No. UT 96/02 dated 24. 05. 1996 whereby the said goods were consigned to one Triumph-I Pvt. Ltd at Moscow. The learned counsel for the defendant further submits that although the consignor on the face of the document appears to be the defendant, it was actually the plaintiff who had consigned the goods under the said invoice dated 24. 05. 1996. Alongwith the synopsis of submissions filed on behalf of the defendant, annexed thereto as annexure- a is a chart comparing the entries in the invoice dated 06. 06. 1996 filed by the plaintiff and the invoice dated 24. 05. 1996 filed by the defendant. It is apparent from going through the chart that the items style numbers and the quantities of each of the style numbers are identical. Although the invoice dated 24. 05. 1996 is in terms of dollars (US$ 83,735. 655), if the same is converted into Indian rupees at exchange rate prevailing on 24. 05. 1996, it would come to an exact figure of Rs. 28,99,057. 75 which is the total amount of the said six cheques as well as the amount shown in the invoice dated 06. 06. 1996. Therefore, it is the contention of the learned counsel for the defendant that the goods which were said to have been represented under invoice dated 06. 06. 1996 were, in fact, not delivered to the defendant, but had already been consigned to the said Triumph-I Pvt. Ltd, Moscow under invoice dated 24. 05. 1996. As regards the issuance of the six cheques, the learned counsel for the defendant submitted that these cheques were only issued on the instructions of the Moscow party to facilitate the transaction between the plaintiff and the moscow party. He further submitted that as the goods were not received by the defendant, no gain or advantage accrued in favour of the defendant and because the Moscow party had raised objections with regard to the quality of the goods, the defendant had issued instructions for stopping payment of the cheques. The learned counsel for the plaintiff also submits that the plaintiff and the defendant went to Moscow at the request of the Moscow party to inspect the goods. The learned counsel for the plaintiff also submits that the plaintiff and the defendant went to Moscow at the request of the Moscow party to inspect the goods. He also says that there are documents to show that such a visit was undertaken. ( 4 ) THE learned counsel for the plaintiff, however, submitted that this defence, which is now being sought to be raised by the defendant, is merely an illusory one and is not borne out by the contemporaneous documents. He submitted that it may be coincidental that the amount involved in the invoice dated 06. 06. 1996 and 24. 05. 1996 are identical. But, it is quite plausible and possible that the very goods consigned to the defendant under invoice dated 06. 06. 1996 were sent by the defendant to the Moscow party. He pointed out that invoice dated 06. 06. 1996 on the face of it shows that it is a consignment from the plaintiff to the defendant, whereas the invoice dated 24. 05. 1996 is a consignment from the defendant to the Moscow party with which the plaintiff is not concerned. He further submitted that the entire invoice amount involved 9070. 25 metres of natural silk fabric, which, according to him, would not be possible to verify in the course of one day and, therefore, it was obvious that these items were delivered by the defendant to the plaintiff on various dates prior to 06. 06. 1996. It is also the case of the plaintiff that the goods were actually consigned to Moscow party as per the Airway Bill dated 28. 05. 1996 and the customs clearance is also of 06. 06. 1996, which, according to the counsel for the defendant, was only made known to him on 06. 06. 1996. However, upon examining the documents and in particular the document at page 3 of the plaintiff s documents which is a letter dated 26. 08. 1996 issued by the defendant to the plaintiff, which is not denied by the defendant, it becomes clear that the story of non-delivery of the goods under invoice dated 06. 06. 1996 is not tenable. In the letter dated 26. 08. 1996, it is clearly indicated that there were certain discussions regarding payment of the plaintiff s Bill No. 005103 dated 06. 06. 1996 for Rs. 28,99,057. 75. 06. 1996 is not tenable. In the letter dated 26. 08. 1996, it is clearly indicated that there were certain discussions regarding payment of the plaintiff s Bill No. 005103 dated 06. 06. 1996 for Rs. 28,99,057. 75. The defendant also confirmed that the payment would be made in installments of Rs. 5 lakhs per week starting from 07. 10. 1996. The defendant also indicated the reason for the delay in the payments to be the delay in the shipment. There was a request by the defendant made to the plaintiff to bear with them. This letter is extremely material inasmuch as the same is an admitted document and secondly it has clear reference to the invoice dated 06. 06. 1996 for the exact amount of Rs. 28,99,057. 75 and also the undertaking that the amount would be paid but in installments of Rs. 5 lakhs per week starting on 07. 10. 1996. It clearly shows that the story of non- delivery raised by the defendant in its leave to defend application is not tenable and is contradicted by this contemporaneous document. It also shows the acknowledgment of the liability of the defendant insofar as payment of the amount of Rs. 28,99,057. 75 is concerned. The further document which was pointed out by the learned counsel for the plaintiff is also material and that is the letter dated 27. 08. 1996 which contains a request that ?the six cheques given to the plaintiff be kept pending settlement with the buyer by you?. It appears from this letter that the defendant had informed the plaintiff that there is some dispute with regard to the quality of the goods which had been sent to the party in Moscow. ( 5 ) FROM the aforesaid facts and circumstances, it appears that the goods were sold in the first instance by the plaintiff to the defendant, who, in turn, sold the goods to the party in Moscow. Insofar as the present transaction is concerned, that is the transaction between the plaintiff and the defendant. The goods had been received by the defendant and payments thereof were also made by virtue of six cheques of Rs. 5 lakhs each (except the last cheque which was for the balance amount) which were dated in a manner so that they could be encashed in one week intervals as contemplated in the letter dated 26. 08. 1996. The goods had been received by the defendant and payments thereof were also made by virtue of six cheques of Rs. 5 lakhs each (except the last cheque which was for the balance amount) which were dated in a manner so that they could be encashed in one week intervals as contemplated in the letter dated 26. 08. 1996. ( 6 ) THE principles with regard to grant of leave to defend are well-settled and have been summarised by the Supreme Court in the case of Sunil Enterprises and Another v. SBI Commercial and International Bank Ltd: 1998 (5) SCC 354 . The same have been set out in paragraph 4 thereof which reads as under:-"4. The position in law has been explained by this Court in Santosh Kumar v. Bhai Mool Singh1, Milkhiram (India) (P) Ltd. v. Chamanlal Bros2 and Mechelec engineers and Manufacturers v. Basic Equipment Corpn. 3 The propositions laid down in these decisions may be summed up as follows:- (a) If the defendant satisfies the court that he has a good defence to the claim on merits, 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 possibly good defence, 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, if the affidavit discloses that at the trial he may be able to establish a defence to the plaintiff s claim, the court may impose conditions at the time of granting leave to defend ? the conditions being as to time of trial or mode of trial but not as to payment into court or furnishing security. (d) If the defendant has no defence, or if the defence is sham or illusory or practically moonshine, 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, the court may show mercy to the defendant by enabling him to try to prove a defence but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into court or otherwise secured. (e) If the defendant has no defence or the defence is illusory or sham or practically moonshine, the court may show mercy to the defendant by enabling him to try to prove a defence but at the same time protect the plaintiff imposing the condition that the amount claimed should be paid into court or otherwise secured. " ( 7 ) CONSIDERING the entire facts and circumstances of the case and the arguments advanced at the bar, I find myself to be in agreement with the learned counsel for the plaintiff that the defence sought to be set up by the defendant is illusory and, therefore, the defendant is not entitled to unconditional leave to defend. However, I am inclined to consider proposition (e) as laid down by the Supreme Court in the above mentioned decision as being relevant for the purposes of the present case and, accordingly, I grant leave to defend to the defendant, but, at the same time, the plaintiff needs to be protected and the protection would be in the form of the defendant depositing a sum of rs. 28,99,057. 75 with this court within a period of four weeks. The leave to defend is conditional upon such deposit. This application is disposed of accordingly. CS (OS) 2240/1999 list for further directions on 06. 02. 2006. .