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2018 DIGILAW 1961 (MAD)

D. Rajini Sukumar v. Pushpa Kumari

2018-06-26

P.T.ASHA

body2018
ORDER : The 2nd defendant has filed the above Civil Revision Petition, challenging the Order passed in I.A.No.3023 of 2009 in O.S.No.8309 of 2008 by the learned VI Assistant Judge, City Civil Court, Chennai, in and by which, the application filed by her seeking leave to defend the suit was dismissed. 2. The parties are described in the same array as in the suit. The plaintiff has filed the above suit for recovery of a sum of Rs.1,18,500/- together with interest on Rs.80,000/- at the rate of 24% per annum from the date of Plaint till the date of realization as an Under Chapter suit. 3. It is the case of the plaintiff that the 1st defendant in the suit had borrowed a sum of Rs.1,00,000/-, for which, he had executed a Promissory Note. The plaintiff would also contend that the 2nd defendant, who is the wife of the 1st defendant, had guaranteed the due repayment of this money. It was her further case that since the 2nd defendant herein had not paid the borrowed amount, despite several requests being made and notice dated 11.01.2008, the plaintiff has filed the suit under Order 37 of the Code of Civil Procedure (hereinafter referred to as the “Code”). 4. From the perusal of the records, it appears that the plaintiff had also filed a petition seeking an Order of Attachment before Judgment and this application was taken up on the very same date of filing i.e., on 26.11.2008. The Court has passed the following orders : “Conditional attach by 12.01.2009” 5. It is further seen that on 12.01.2009, the attachment has been effected and the endorsement dated 12.01.2009 reads as follows : "Attachment made and executed. Door locked and affixed" 6. However, on a perusal of the suit records, it is seen that notice was served on both the defendants, which includes the petitioner for hearing on 12.01.2009 and their Counsel had undertaken to file Vakalat. It is therefore not known as to how the endorsement made in the Interlocutory Application which shows that service could not be affected. It is pertinent to point out that the property attached belongs to the 2nd defendant. 7. Upon receiving notice in the above suit, the 2nd defendant herein has filed I.A.No.3023 of 2009 seeking unconditional leave to defend the suit. It is pertinent to point out that the property attached belongs to the 2nd defendant. 7. Upon receiving notice in the above suit, the 2nd defendant herein has filed I.A.No.3023 of 2009 seeking unconditional leave to defend the suit. The main ground on which the 2nd defendant would seek leave to defend the suit, is that she has not stood guarantee for the above loan and she has been impleaded with the ulterior motive of attaching her property. She had further stated that the plaintiff has not spelt out the manner in which the guarantee has been given by her. 8. The plaintiff filed a counter denying the averments contained in the petition filed by the 2nd defendant and in addition to, contended that the defendants had approached the plaintiff through their Finance Agent, which would clearly demonstrate that the 2nd defendant had stood guarantee for the said loan and therefore, it was the contention of the Plaintiff that the defence raised by the 2nd defendant is nothing, but illusory, moonshine, sham, nominal and lacking in bona fides, devoid of merits and therefore, liable to be dismissed. 9. The learned VI Assistant Judge, City Civil Court, Chennai, dismissed the above application on the ground that the defendants are husband and wife and since the property stood in the name of the 2nd defendant/revision petitioner herein, there is a presumption that the 2nd defendant would have given the guarantee and therefore, the learned Judge was of the opinion that the revision petitioner had not made out a case for seeking leave to defend the suit. 10. Though, the plaintiff/respondent herein has been served, she has not chosen to appear before this Court. 11. The learned counsel for the revision petitioner would argue that the Plaint is absolutely silent and does not provide details as to the manner, in which, the 2nd defendant/revision petitioner has given the guarantee and except for making statements like ''would also guarantee the due payment of the money" and "also on the faith of the guarantee" in the Plaint. Apart from the above statements there are no other pleadings with reference to the alleged guarantee. The learned counsel would also contend that these are very vague allegations, which have to be proved by the plaintiff. Apart from the above statements there are no other pleadings with reference to the alleged guarantee. The learned counsel would also contend that these are very vague allegations, which have to be proved by the plaintiff. Considering the facts that the revision petitioner denies the allegations that she has stood guarantee for the loan, she should have been granted leave to defend the suit. The Counsel would further argue that the defence that being put forward by her, is neither illusory nor moon shine, sham, nominal or lacking in bona fides, devoid of merits, warranting the dismissal of the application. That apart, even the ex parte decree that has followed, is totally devoid of any reasoning, this Court has time and again deprecated ex parte decrees being passed by way of one line orders bereft of any reasoning. It is the categoric contention of the revision petitioner that she has not guaranteed the due repayment of the loan taken by the 1st defendant, her husband and nor is it the case of the plaintiff that the revision petitioner has also borrowed the loan. The revision petitioner is sought to be mulcted with the liability only on the ground that she had guaranteed the borrowal of her husband. This being a substantial issue, the plaintiff is bound to prove the same. This exercise can be done after the revision petitioner/2nd defendant is granted leave to defend the suit. The Counsel for the Revision Petitioner would also contend that the suit filed under Order 37 Rule 1 of the Code, is not maintainable inasmuch as the suit is one on a guarantee which is not a Negotiable Instrument. In support of this contention, the learned counsel has relied on a Judgment reported in AIR 1983 Karnataka 73 {H. Mohamed Khan (deceased by legal heirs) and others v. Andhra Bank Ltd. and others}. 12. Though, the revision is filed under Section 115 of the Code, this Court deems it fit to treat the revision as one under Article 227 of the Constitution of India for the following reasons : (a) The suit is filed on 25.11.2008 and the date of the first hearing of the suit was fixed on 12.01.2009. (b) The plaint and the affidavit filed in support of I.A.No.20326 of 2008 (the petition seeking attachment before Judgment) has been signed on 20.11.2008. (b) The plaint and the affidavit filed in support of I.A.No.20326 of 2008 (the petition seeking attachment before Judgment) has been signed on 20.11.2008. (c) The legal notice dated 11.11.2008 (Ex.A2) is despatched to the defendants by Courier on 19.01.2008 and is returned unserved on 21.11.2008. The suit is filed 4 days later on 25.11.2008 and the property is directed to be attached on 26.11.2008. (d) The Suit summon is served on the defendants, but the notice in I.A.No.70326 of 2008 is returned with an endorsement door locked and affixed. (e) The ex parte judgment is a non-speaking one line order and this court is unable to find the basis on which the suit has been decreed when there is no issue framed and a finding rendered on the same. The above events gives rise to serious misgivings in the mind of this Court and casts a cloud on the orders passed in the application seeking leave to defend the suit. 13. The learned VI Assistant Judge, City Civil Court, Chennai, has rejected the application merely on a presumption not backed by concrete evidence. The 2nd defendant has categorically denied standing guarantee for the loan borrowed by the 1st defendant and the factum of guarantee has to be proved by the plaintiff. Therefore, the learned Judge has erred in dismissing the petition seeking leave to defend. 14. The Hon'ble Supreme Court in its Judgment reported in AIR 1977 SC 577 [Mechelec Engineers and Manufacturers vs. Basic Equipment Corporation] laid down several proposition, which have to be borne in mind before granting leave to defend a Summary Suit. The Hon'ble Supreme Court has held that when the defendant satisfies the Court that he has a defense to the claim on merits and he discloses facts which are sufficient to entitle him to defend the suit, Courts should unhesitatingly granting unconditional leave to the defendant. This judgment was an oft quoted one with the amendment to the Code of Civil Procedure, 1976 and an amendment being introduced to Order 37 Rule 3, the principles that will laid down in Mechelec Engineers' case stood superseded. However, the amendment introduced was the same as the Bombay amendment, which was considered by a four Judge Bench of the Hon'ble Supreme Court in Milkhiram (India) (P) Limited v. Chamanlal Bros., { AIR 1965 SC 1698 }. However, the amendment introduced was the same as the Bombay amendment, which was considered by a four Judge Bench of the Hon'ble Supreme Court in Milkhiram (India) (P) Limited v. Chamanlal Bros., { AIR 1965 SC 1698 }. This decision laid down the following principles, which had to be satisfied for the grant of leave to defend : a. If the defendant satisfied the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit. b. If the defendant raised triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend. c. Even if the defendant raises triable issues, if a doubt is left with the trial Judge about the defendant's good faith, or the genuiness of the triable issues, the trial Judge may impose conditions both as to time or mode of trial, as well as payment into Court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes s not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security. d. If the defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court fees the justice of the case requires. e. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to Judgment forthwith. e. If the defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to Judgment forthwith. f. If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.” 15. The issue of grant of leave to defend was considered in a recent Judgment reported in 2015 10 SCC 521 [State Bank of Hyderabad vs. Robo Bank]. The Hon'ble Supreme Court in Paragraph 17 of the abovesaid Judgment has held as follows : “An analysis of the above principles makes it clear that in cases where the defendants has raised a triable issue or a reasonable defence, the defendant is entitled to unconditional leave to defend. Leave is granted to defend even in cases where the defendant upon disclosing a fact, though lacks the defence but makes a positive impression that at the trial the defence set up is illusory or sham or practically moonshine, is the plaintiff entitled to leave to sign judgment.” 16. The Supreme Court in a very recent Judgment reported in (2017) 1 SCC 568 [IDBI Trusteeship Services Limited v. Hubtown Limited] has considered the provisions of Order 37 Rule 33 as it stood prior to 1976 amendment and the procedure post amendment. The Bench has held that the decision in Milkhiram's case would be a binding decision insofar as the provisions of Order 37 Rule 3 are concerned. The above Judgment also deals with the proposition that in order to invoke the provisions of Order 37 of Code, there must be concluded contract. In the case on hand, the 2nd defendant has categorically denied standing guarantee for the loan borrowed by the first defendant. The Hon'ble Supreme Court has relied on an earlier Judgment reported in 2008 (3) SCC 770 {Neebha Kapuri v. Jeyanthilal Khandwala} to state that when the applicability of Order 37 itself, is in question granting leave to defend is permissible. 17. As stated in Paragraph 9, there are several glaring discrepancies in the entire procedure followed in the suit. The Hon'ble Supreme Court has relied on an earlier Judgment reported in 2008 (3) SCC 770 {Neebha Kapuri v. Jeyanthilal Khandwala} to state that when the applicability of Order 37 itself, is in question granting leave to defend is permissible. 17. As stated in Paragraph 9, there are several glaring discrepancies in the entire procedure followed in the suit. It is a well established judicial dicta that when an order is violative of the fundamental basic principles of justice and fair play or where a patent or flagrant error in procedure of law has crept in which results in manifest injustice, this Court can exercise its jurisdiction under Article 227 of the Constitution of India to right this wrong. Therefore, I am of the opinion that the Order of the learned VI Assistant Judge, City Civil Court, Chennai in I.A.No.3023 of 2009 in O.S.No.8309 of 2008 is erroneous and liable to be set aside. This Court, in the light of the circumstances narrated above, is also of the opinion that the ex parte decree should be set aside. In the result, this Civil Revision Petition is allowed on costs. The order of the learned VI Assistant Judge, City Civil Court, Chennai, dated 24.04.2009 in I.A.No.3023 of 2009 in O.S.No.8309 of 2008 is set aside. Leave is granted to the revision petitioner to defend the suit. The ex parte decree passed in O.S.No.8309 of 2008 is also set aside. Consequently, connected Miscellaneous Petition is closed.