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2021 DIGILAW 814 (GUJ)

Dhirajbhai Narshibhai Patel v. Umiya Steel Industries Through Babubhai Jamnadas Patel

2021-09-13

B.N.KARIA

body2021
JUDGMENT : Rule returnable forthwith. Mr. Keyur Vyas, learned advocate has waived service of notice of rule for the respondent. 2. By way of present petition, the petitioner – original defendant has prayed for appropriate writ, order or direction quashing and setting aside the impugned order dated 18.12.2018 below application for leave to defend at Exh.11 passed in Summary Civil Suit No.14 of 2014 by learned Additional Senior Civil Court, Kalol. 3. The short facts leading to file present petition are under: 3.1 The Summary Civil Suit No.14 of 2014 was filed by the respondent – original plaintiff against the present petitioner – original defendant under Order 37 Rule 1-3 of the Code of Civil Procedure for recovery of the amount of Rs.12,65,217.64. In the said suit, the respondent – original plaintiff has taken out summons for judgment at Exh.9 and prayed to sign the judgment. In the application at Exh.9, it was contended that he is the owner of M/s. Umiya Steel Industries and that the parties to the suit have business relationship since last more than 3 years. It was contended that he is doing coating of the articles and for the said purpose, he was raising regular bills to the petitioner – original defendant. It was contended that from 1.7.2013 to 31.12.2013, he had raised powder coating bills for an amount to the sum of Rs.11,65,217.94 which was duly received by the petitioner – original defendant. It was contended that the defendant was regularly making the payment, however, despite demand followed by legal notice, the said amount has not been paid and vague reply was given to his legal notice and therefore, he was entitled for recovery of an amount of Rs.11,65,217.64 alongwith interest of Rs.1,00,000 and total amount of Rs.12,65,217.94. 3.2 On service of process of suit, the defendant has filed application seeking leave to defend at Exh.11 and has requested to permit him to contest the said suit unconditionally. In the application for leave to defend, the defendant raised several triable issues inter-alia contending that whether there is any business relation between plaintiff and defendant or not; whether there is privity of contract between the plaintiff and defendant or not and whether the plaintiff is entitled to recover alleged suit amount and interest. In the application for leave to defend, the defendant raised several triable issues inter-alia contending that whether there is any business relation between plaintiff and defendant or not; whether there is privity of contract between the plaintiff and defendant or not and whether the plaintiff is entitled to recover alleged suit amount and interest. 3.3 The learned Additional Senior Civil Judge, Kalol by his order dated 18.12.2018 was pleased to permit the defendant to defend the said suit after observing that there are triable issues involved in the suit, however, imposed condition to deposit 20% of the suit amount within 7 days. Thereafter, time was extended for further period of 30 days below application Exh.52 on 18.12.2018. 3.4 Aggrieved and dissatisfied with the impugned order below application at Exh.11, the petitioner - original defendant has approached this Court by way of present petition under Articles 226 and 227 of the Constitution of India. 4. Heard learned advocate Mr. N.V.Gandhi for the petitioner and learned advocate Mr. Keyur Vyas for the respondent. 5. Mr. Gandhi, learned advocate appearing for the petitioner has submitted that when consistent view is taken by the Hon’ble Apex Court in relation to summary trials under Order 37 of the Civil Procedure Code is that when a Court is satisfied that a triable issue has been raised in defence of the claim made on behalf of the plaintiff, unconditional leave has to be granted to the defendant to contest the suit and no direction could be given while granting such leave to the defendant to deposit any amount by way of security. It is further urged by learned advocate for the petitioner that sub-rule (5) of Rule-3 of Order 37 is important to this case in the sense that it recognizes a dichotomy between a disputed claim and admitted claim in a suit filed under Order 37 of the Code. It is further submitted that as far as the disputed claim is concerned, once the Court comes to a conclusion that there is a triable issue, unconditional leave has to be given to the defendant to defend the suit. Referring to the plaint, learned advocate for the petitioner has submitted that the suit was filed against the defendant namely, Dhirajbhai Narshibhai Patel. Referring to the plaint, learned advocate for the petitioner has submitted that the suit was filed against the defendant namely, Dhirajbhai Narshibhai Patel. Referring the bills from page No.37 onwards, it is submitted that all the bills are issued in favour of M/s. Lancer Laser Tech Limited, which is a proprietary firm, the said company has not been joined as a defendant in the summary suit. He has further raised a question against maintainability of the suit in absence of the company itself. He has submitted that as there is triable issues, unconditional leave to defend was required to be granted in favour of the defendant which the learned trial Court has not taken into consideration and hence, it was requested by learned advocate for the petitioner to quash the impugned order passed below Exh.11 dated 18.12.2018 and permit the defendant to contest the suit unconditionally as prayed for. 5.1 In support of his arguments, learned advocate for the petitioner has relied upon the decisions in the case between (i) Sudin Dilip Talaulikar v. Polycap Wires Pvt. Ltd. & Ors. [AIR 2019) SC 3380]; (ii) State Bank of Hyderabad v. Rabo Bank [ AIR 2015 SC 3820 ]; (iii) Mechalec Engineers & Manufacturers v. Basic Equipment Corporation [ AIR 1977 SC 577 ] and (iv) Santosh Kumar v. Bhai Mool Singh [ AIR 1958 SC 321 ]. 6. From the other side, learned advocate Mr. Keyur Vyas for the respondent has supported the order passed by the Court below. Referring to the averments of the plaint and the correspondence between the parties through their advocates dated 3.4.2014 and 23.4.2014, it is submitted that in connection with the business transactions carried out between the plaintiff and the defendant, part payment was also made by the defendant as per the terms and conditions, which is undisputedly admitted in the notice. Once upon a time, it was denied by the defendant that no amount was to be paid to the plaintiff, however, without disclosing the bills, the first notice was issued by the plaintiff. As per the averments made in the reply to the notice dated 23.4.2014, defendant has stated that payment was clearly made by the defendant, i.e. payment of Rs.2,58,147/- was made on 21.3.2014. He has submitted that no error is committed by the Court below by directing the defendant to deposit 20% of the suit amount. As per the averments made in the reply to the notice dated 23.4.2014, defendant has stated that payment was clearly made by the defendant, i.e. payment of Rs.2,58,147/- was made on 21.3.2014. He has submitted that no error is committed by the Court below by directing the defendant to deposit 20% of the suit amount. He has also referred to be bills produced on record. 6.1 In support of his arguments, learned advocate for the defendant has relied upon the decisions in the case between (i) STCI Finance Ltd. v. Cedar Infonet Pvt. Ltd. [2019 JX (SC) 692]; (ii) Sujata Shetty & Ors. v. Pushpendra R. Bansal [Civil Appeal No.6120/2019]; (iii) Southern Sales & Service v. Sauermilch Design & Handels Gmbh [ 2008 (14) SCC 457 ]; (iv) Sify Limited v. First Flight Couriers Ltd. [ 2008 (4) SCC 246 ]; (v) Mechelec Engineers & Manufacturers v. Basic Equipment Corporation [ 1976 (4) SCC 687 ]; (vi) Shree Corporation v. M.D. Overseas Ltd. [2015 JX (GUJ) 1537]; (vii) Gujarat Electricity Board v. Shiv Corporation [2012 JX (GUJ) 732] and (viii) K.K.Arora v. Meghraj & Sons [ 1987 (1) GLR 427 ]. 7. Having heard learned advocates for the respective parties and upon considering the impugned order dated 18.12.2018 passed below application at Exh.11 in Summary Suit No.14 of 2014, it appears that the main ground which was contended in the leave to defend application was that there was no privity of the contract between the parties. It was further contended that the company of the defendant was not joined as a party to the suit and therefore, the maintainability of the suit was questioned by the defendant in absence of company itself as a party to the proceedings. It appears from the contents of the plaint filed by the original plaintiff that there was business relation with the defendant since last 3 years and whatever the articles were supplied to the defendant, regular bills were also given to the defendant. Account of the defendant was opened with the plaintiff and was continued till filing of the suit. It was further averred in the plaint that at an initial stage, the regular payment was made by the defendant as per the bills. Account of the defendant was opened with the plaintiff and was continued till filing of the suit. It was further averred in the plaint that at an initial stage, the regular payment was made by the defendant as per the bills. Power coating bills were issued and supplied to the defendant from 1.7.2013 to 31.12.2013 and the signature of the defendant was also obtained in the gate pass showing the receipt of the goods supplied by the plaintiff. A demand of Rs.11,65,217/- was made by the plaintiff for the bills from 1.7.2013 to 31.12.2013. Frequent demand was made by the plaintiff and thereafter, on 21.3.2014 payment of Rs.2,58,000/- was made by the defendant which was credited in the account. Thereafter, notice was issued by the plaintiff which was replied evasively by the defendant. Upon considering the correspondence in the form of notice issued by the plaintiff as well as reply of the defendant through their advocates, it appears that there was business transaction between the parties and as per the statement made by the defendants, 14 job works of the goods was supplied by the plaintiff, payment was made by the defendant and as per the notice, payment of Rs.2,58,147/- was made on 21.3.2014. It was further contended in the reply of the notice that there was no due to be paid by the defendant. No further contention was raised in the reply against the notice issued by the plaintiff on 23.4.2014. 8. The application at Exh.11 was mainly opposed by the defendant on the ground that there was no privity of the contract between the plaintiff and the defendant. Further contention was that there was no cause of action and there are triable issues like whether there were business relation between them or not; whether the plaintiff is entitled to interest or not and therefore, it was prayed to grant unconditional leave to defend the suit. Further contention was that there was no cause of action and there are triable issues like whether there were business relation between them or not; whether the plaintiff is entitled to interest or not and therefore, it was prayed to grant unconditional leave to defend the suit. From the averments made in the plaint filed by the present plaintiff as well as correspondence in form of notice and bills which are produced at Exh.36 containing 71 bills in favour of M/s. Lancer Laser Tech Ltd., this Court is of the opinion that the learned trial Court has not committed any error in granting leave to defend conditionally to deposit 20% of the claim amount within 7 days from the date of the order which was thereafter extended for a limited period. 9. In the judgment relied upon by the learned advocate for the petitioner in the case between Sudin Dilip Talaulikar v. Polycap Wires Pvt. Ltd. & Ors. [AIR 2019) SC 3380], it is observed that, in a summary suit, if the defendant discloses such facts of a prima facie fair and reasonable defence, the court may grant unconditional leave to defend. In a suit filed by the plaintiff the subjective satisfaction of the Court on basis of the materials that may be placed before it. However, in an appropriate case, if the court is satisfied of a plausible or probable defence and which defence is not considered a sham or moonshine, but yet leaving certain doubts in the mind of the court, it may grant conditional leave to defend. 9.1 In the case between Mechalec Engineers & Manufacturers v. Basic Equipment Corporation [ AIR 1977 SC 577 ], Hon’ble Apex Court has laid down following principles to be followed while granting permission to leave to defend: “(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, shews 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 plaintiff's 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 conditions as to the time or mode of trial but not as to payment into 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 secured 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". 9.2 In the case between Santosh Kumar v. Bhai Mool Singh [ AIR 1958 SC 321 ] relied upon by the learned advocate for the plaintiff, it is observed that:- “7. Now what we are examining here are laws of procedure. The spirit in which questions about procedure are to be approached and the manner in which rules relating to them are to be interpreted are laid down in Sangray Singh v. Election Tribunal, Kotah, Bhurey Lal Baya. "Now a code of procedure must be regarded as such. It is procedure, something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a, thing designed to trip people up. "Now a code of procedure must be regarded as such. It is procedure, something designed to facilitate justice and further its ends; not a penal enactment for punishment and penalties; not a, thing designed to trip people up. Too technical a construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it. Next, there must be ever present to the mind the fact that our laws of procedure are grounded on a principle of natural justice which requires that men should not be condemned unheard, that decisions should not be reached behind their backs, that proceedings that affect their lives and property should not continue in their absence and that they should not be precluded from participating in them. Of course, there must be exceptions and where they are clearly defined they must be given effect to. But taken by and large, and subject to that proviso, our laws of procedure should be construed, wherever that is reasonably possible, in the light of that principle." Applied to the present case, these observations mean that though the Court is given a discretion it must be exercised along judicial lines, and that in turn means, in consonance with the principles of natural justice that form the foundations of our laws. Those principles, so far as they touch the present matter, are well known and have been laid down and followed in numerous cases. 8. The decision most frequently referred to is a decision of the House of Lords in England where a similar rule prevails. It is Jacobs v. Booth's Distillery Company (1). Judgment was delivered in 1901. Their Lordships said that whenever the deferce raises a "triable issue", leave must be given, and later cases say that when that is the case it must be given unconditionally, otherwise the leave may be illusory. See, for example, Powszechny Bank Zwiazkowy W. Polsce v. Paros (2), in England and Sundaram Chettiar v. Valli Ammal (3) in India. Among other cases that adopt the "triable issue " test are Kiranmoyee Dassi v. J. Chatterjee and Gopala Rao v. Subba Rao (5). 9. See, for example, Powszechny Bank Zwiazkowy W. Polsce v. Paros (2), in England and Sundaram Chettiar v. Valli Ammal (3) in India. Among other cases that adopt the "triable issue " test are Kiranmoyee Dassi v. J. Chatterjee and Gopala Rao v. Subba Rao (5). 9. The learned counsel for the plaintiff-respondent relied on Gopala Rao v. Subba Rao (5), Manohar Lal v. Nanhe Mal (6), and Shib Karan Das v. Mohammed Sadiq (7). All that we need say about them is that if the Court is of opinion that the defence is not bona fide, then it can impose conditions and is not tied down to refusing leave to defend. We agree with Varadachariar J. in the Madras case that the Court has this third course open to it in a suitable case. But it cannot reach the conclusion that the defence is not bona fide arbitrarily. It is as much bound by judicial rules and judicial procedure in reaching a conclusion of this kind as in any other matter. It is unnecessary no examine the facts of those cases because they are not in appeal before us. We are only concerned with the principle.” 9.3 In the case between STCI Finance Ltd. v. Cedar Infonet Pvt. Ltd. [2019 JX (SC) 692] relied on by the learned advocate for the respondent, Hon’ble Apex Court has considered the issue and confirmed the order passed by the learned trial court granting the application for leave to defend conditionally. All the rights and contentions of the parties on question of law and facts were kept open to be adjudicated upon at the time of the suit. 9.4 In another matter, in the case between Southern Sales & Service v. Sauermilch Design & Handels Gmbh [ 2008 (14) SCC 457 ], Hon’ble Apex Court directed the defendant to deposit 55% amount of the suit as a principal condition to grant leave to defend the suit. Hon’ble Apex Court did not warrant interference as the trial court has exercised its jurisdiction under second proviso to sub-rule (5) of Rule 3 of Order 37 of the Code. Hon’ble Apex Court did not warrant interference as the trial court has exercised its jurisdiction under second proviso to sub-rule (5) of Rule 3 of Order 37 of the Code. It was further observed that the earlier concept of granting unconditional leave when a triable issue is raised on behalf of the defendant, has been supplemented by the addition of a mandate, which has been imposed on the defendant, to deposit any amount as admitted before leave to defend the suit can be granted. The question as to whether leave to defend a suit can be granted or not is within the discretionary powers of the High Court and it does not appear to us that such discretion has been exercised erroneously or with any irregularity which warrants interference by this Court. 9.5 Other decisions relied upon by the learned advocate for the respondent - original plaintiff are on the same line observing that grant of leave to defend with or without consideration is within the discretion of the Court. 10. Considering the facts and circumstances of the case, this Court is of the view that the learned trial Court has committed no illegality in granting leave to defend application Exh.11 on condition to deposit 20% of the claim amount in its order dated 18.12.2018. Therefore, in view of above, this petition is dismissed. 10.1 The petitioner - original defendant shall deposit the said amount and comply with the order passed by the learned trial Court dated 18.12.2018 within period of 4 weeks from the date of receipt of this order. 10.2 It would be open for the parties to lead their evidence before the learned trial Court and argue permissible defence. Either side shall be permitted to request the learned trial Court to expedite the suit. With above observations and directions, present petition is dismissed and accordingly stands disposed of. Rule is discharged.