Research › Search › Judgment

Telangana High Court · body

2025 DIGILAW 1397 (TS)

Creative Print and Pack v. Badruka Exim P Ltd.

2025-11-06

MOUSHUMI BHATTACHARYA

body2025
ORDER : MOUSHUMI BHATTACHARYA, J. 1. The Civil Revision Petition arises out of an order dated 27.06.2025 passed by the learned Additional Senior Civil Judge, Medchal-Malkajgiri District at Medchal, dismissing I.A.No.127 of 2025 in O.S.No.127 of 2024 filed by the petitioners/defendants for grant of leave to defend the Suit of the respondent/plaintiff. 2. The Suit filed by the respondent/plaintiff was a Summary Suit for recovery of Rs.38,13,684/- along with pendente lite and future interest @ 18% per annum, filed under Order XXXVII read with Order VII Rule 1 and section 26 of The Code of Civil Procedure, 1908 (‘CPC’). The petitioners/defendants in the said Suit filed the present I.A. (I.A.No.127 of 2025) under Order XXXVII Rule 3(5) read with section 151 of the CPC seeking leave to defend the Suit and permit the petitioners/defendants to file a suitable written statement in defence of the alleged claim of the respondent/plaintiff. 3. By the impugned order dated 27.06.2025, the Trial Court dismissed the I.A. on the ground of the petitioners/defendants failing to establish a good case to defend the Suit. 4. Learned counsel appearing for the petitioners/defendants submits that the Trial Court erred in not granting leave to defend the Suit since the petitioners had raised triable issues which warranted adjudication. Counsel submits that the triable issues included the three invoices issued by the plaintiff to the defendants for the supply of the goods agreed upon by the parties not containing the signature or seal of the defendant. Counsel also submits that the invoices raised by the plaintiff were false and fabricated. Counsel further submits that the plaintiff was not entitled to claim interest at the rate of 18% per annum since there was no agreement to that effect between the parties. 5. Learned counsel appearing for the respondent/plaintiff places on record a document (Confirmation of Accounts) dated 24.04.2023 issued by the defendants to the plaintiff confirming the accounts for the period from 01.04.2019 to 24.04.2023 and reflecting the payments made by the defendants to the plaintiff till 18.02.2023. Counsel submits that all the invoices including those disputed by the defendants were mentioned in the said Confirmation of Accounts. Counsel submits that interest at the rate of 18% per annum was demanded due to the excessive and inordinate delay on the part of the defendants in making payments to the plaintiff including on nine occasions. 6. Counsel submits that all the invoices including those disputed by the defendants were mentioned in the said Confirmation of Accounts. Counsel submits that interest at the rate of 18% per annum was demanded due to the excessive and inordinate delay on the part of the defendants in making payments to the plaintiff including on nine occasions. 6. I have heard learned counsel appearing for the parties and considered the documents placed on record to corroborate their respective submissions. 7. The Suit filed by the respondent/plaintiff for the recovery of money was a ‘Summary Suit’ as defined under Order XXXVII of the CPC. Order XXXVII – ‘Summary Procedure’ under Rule 1 defines the Courts and Classes of Suits to which the order is to apply. 8. The present Suit falls under Order XXXVII Rule 1 Sub-rule (2)(b) of the CPC being a Suit in which the plaintiff seeks to recover a debt or liquidated demand in money payable by the defendants, with or without interest. The plaint avers that the plaintiff is a registered Micro, Small and Medium Enterprise (MSME) and is a reputed vendor in the pulp and paper industry. The plaintiff and the defendants have been engaged in the business of sale (by the plaintiff) and purchase (by the defendants) of goods from 01.04.2019 to 13.01.2024. The plaintiff delivered paper and paper products to the defendants vide numerous invoices from 21.11.2020 to 13.03.2021. The invoices issued by the plaintiff to the defendants contained the material particulars including the quantity of goods supplied, the price per unit the place of supply, and the place of delivery etc. The plaintiff states that the said invoices constitute valid written contracts. 9. The procedure for the appearance of a defendant in a Summary Suit is outlined in Order XXXVII Rule 3 of the CPC. Sub-rules (1) to (4) of Rule 3 deal with the procedure for service of summons on the defendant and provides an opportunity to the defendant to enter appearance within ten days of service of summons in the prescribed format. Sub-rule (5) of Rule 3 gives the defendant an option, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend the suit. Sub-rule (5) of Rule 3 gives the defendant an option, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend the suit. Sub-rule 5 also contemplates the grant of unconditional leave to the defendant to defend such terms which the Court may impose. 10. The provisos to Rule 3(5) of Order XXXVII CPC underscore the discretion given to the Court to grant or refuse the defendant’s application for leave to defend. The discretion is somewhat curtailed in the first proviso where the Court is under a mandate to not refuse leave unless the Court is satisfied that the facts disclosed by the defendant do not indicate a substantial defence or that the defence intended to be put up by the defendant is frivolous or vexatious. The second proviso applies in a contrary scenario, i.e., where the leave to defend shall not be granted. The second proviso applies where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him. In such a case, the Court shall not grant leave to defend unless the admitted amount is deposited by the defendant in Court. 11. The framework of Order XXXVII Rule 3 of the CPC indicates that a defendant applying to the Court with a substantial defence deserves leniency in terms of grant of leave to defend. However, the grant of leave must also be accompanied with bona fides, especially where the defendant admits to part of the suit-claim and deposits the admitted component in the Court. The strictures on a defendant, built into the framework of Order XXXVII Rule 3 of the CPC, are further emphasized in Order XXXVII Rule 3(6) of the CPC, which specifies the outcomes at the hearing of such summons for judgment. Under Order XXXVII Rule 3(6)(a) of the CPC, if the defendant has not applied for leave to defend, or if such application has been made and refused, the plaintiff shall be entitled to judgment forthwith. Order XXXVII Rule 3(6)(b) of the CPC proceeds further and entitles the plaintiff to immediate judgment where the defendant has failed to give security within the time specified by the Court or has failed to carry out such other directions given by the Court. 12. Order XXXVII Rule 3(6)(b) of the CPC proceeds further and entitles the plaintiff to immediate judgment where the defendant has failed to give security within the time specified by the Court or has failed to carry out such other directions given by the Court. 12. The facts in the present case must be tested against the intention of the Legislature in framing the procedure for ‘Summary Suits’ under Order XXXVII of the CPC. The only defence raised by the petitioners/defendants in the Trial Court was that the Suit was based on fictitious entries and fraudulent invoices. 13. A perusal of the invoices, which are part of the records in the CRP, shows that most of the invoices raised by the plaintiff on the defendants from 21.11.2020 to 13.03.2021 were signed and sealed by the defendants as acknowledgment, except 3 invoices dated 21.11.2020, 23.11.2020 and 25.01.2021. The defendants’ request for leave to defend based on the three unsigned invoices, however, becomes irrelevant in view of the Confirmation of Accounts sent by the defendants to the plaintiff on 24.04.2023 in respect of the period from 01.04.2019 to 24.04.2023. 14. The Confirmation of Accounts mentions the following important facts: (i) The date and particulars of the invoices raised by the plaintiff on the defendants from 13.11.2020 to 13.03.2021. (ii) The three disputed invoices are part of the list mentioned on the document. (iii) Payments made by the defendants to the plaintiff from 23.11.2020 to 18.02.2023 amounting to Rs.36,37,018.00. (iv) The ‘Closing Balance’ of Rs.23,80,173.00 is clearly reflected in the Confirmation of Accounts. (v) The sum of Rs.36,37,018.00 (payment made by the defendants) + Rs.23,80,173.00 (closing balance/ amount not paid by the defendants) = Rs.60,17,191/-, as recorded in the Confirmation of Accounts. 15. Hence, the Confirmation of Accounts sent by the defendants to the plaintiff on 24.04.2023 constitutes a clear admission by the defendants of the balance payment owed to the plaintiff for the goods supplied and received by the defendants. It is also significant that the three invoices disputed by the defendants are specifically mentioned in the Confirmation of Accounts. 16. It is relevant to note that although the defendants have restricted their defence only to three invoices, the case before the Trial Court was that all the invoices were fictitious and fabricated. Hence, the defendants have contradicted their own case by restricting the dispute to only three invoices. 16. It is relevant to note that although the defendants have restricted their defence only to three invoices, the case before the Trial Court was that all the invoices were fictitious and fabricated. Hence, the defendants have contradicted their own case by restricting the dispute to only three invoices. In any event, the dispute regarding the three invoices becomes irrelevant since all of them are mentioned in the defendants’ ‘Confirmation of Accounts’. 17. The other contention raised by the petitioners/defendants that the plaintiff was not entitled to claim interest at the rate of 18% per annum since there was no agreement to that effect between the parties, is also not tenable. The plaint avers that the Ledger Books maintained by the plaintiff for the period from 01.04.2019 to 13.01.2024 record nine delayed payments made by the defendants to the plaintiff for the goods supplied. The Tabulated Statement is part of the plaint. The delay in payment ranges from 1 year to 3 years. Paragraph 7 of the plaint states that the plaintiff sought for interest accrued on the delayed part-payments in addition to the principal amount due. 18. Moreover, a Legal Demand Notice issued by the plaintiff to the defendants on 23.04.2024, which was received by the plaintiff on 24.04.2024, also mentions the interest calculated by the plaintiff on the delayed payments amounting to Rs.14,83,511/-. Paragraph No.9 of the Demand Notice specifically states that interest at the rate of 18% per annum shall be levied on the delayed payments, based on the Standard Industry Practice in the Pulp and Paper Industry. A Provisional Interest Debit Note dated 02.04.2024 formed part of the Demand Notice. The defendants did not deny or dispute the Legal Notice. The records also do not contain any rebuttal thereto including calculation of interest at the rate of 18% per annum. 19. The only question before the Court is whether Trial Court erred in refusing leave to defend to the petitioners/defendants? 20. The reason given by the Trial Court is that the invoices were signed and stamped by the petitioners/defendants and that the defendants themselves issued Confirmation of Accounts dated 24.04.2023 which indicates that the defendants admitted their liability. The impugned order also records that the defendants did not deny the Confirmation of Accounts. 21. 20. The reason given by the Trial Court is that the invoices were signed and stamped by the petitioners/defendants and that the defendants themselves issued Confirmation of Accounts dated 24.04.2023 which indicates that the defendants admitted their liability. The impugned order also records that the defendants did not deny the Confirmation of Accounts. 21. This Court does not find any error in the reasons given by the Trial Court for dismissing the defendants I.A. for leave to defend. The records placed before the Court do not show any triable issue raised by the defendants for granting leave to defend either in the form of the disputed invoices and interest on delayed payments or otherwise. 22. As stated above, the Suit filed by the respondent/plaintiff for recovery of money falls within the classification of Order XXXVII Rule 1 of the CPC. Order XXXVII Rule 3 of the CPC provides an opportunity to a defendant to apply for leave to defend a Suit under Summary Procedure and for grant of such leave unconditionally or on terms, provided the defendant discloses a substantial factual defence to the Suit. 23. The principle undertaking leave to defend was explained by the Supreme Court in IDBI Trusteeship Services Ltd., Vs. Hubtown Ltd., , [ (2017) 1 SCC 568 ] and reiterated in B.L. Kashyap and Sons Limited Vs. JMS Steels and Power Corporation , [ (2022) 3 SCC 294 ] . Although IDBI Trusteeship held that the earlier decision in Mechelec Engineers and Manufacturers Vs., Basic Equipment Corporation , [ (1976) 4 SCC 687 ] was superseded by the former, the harmony between the two decisions was restored in B.L. Kashyap. In B.L. Kashyap, the Supreme Court held that the grant of leave to defend (with or without conditions), is the ordinary rule and denial of leave is an exception unless the defendant has practically no defence and is unable to give out even a semblance of triable issues before the Court. The Supreme Court found in the facts of that case that the appellant/defendant has indeed raised triable issues, particularly concerning its liability and the defence of the appellant cannot be said to be frivolous or vexatious altogether. 24. The principles delineated in Kiranmayi Dasi Vs. The Supreme Court found in the facts of that case that the appellant/defendant has indeed raised triable issues, particularly concerning its liability and the defence of the appellant cannot be said to be frivolous or vexatious altogether. 24. The principles delineated in Kiranmayi Dasi Vs. J.Chatterji , [AIR 1949 Cal 479] , as reiterated in Mechelec Engineers, nominally altered in IDBI Trusteeship and explained in B.L. Kashyap can be summarized thus: (a) The defendant must satisfy the Court that the defendant has a substantial defence that is one which is likely to succeed and that the plaintiff is not entitled to leave to sign judgment. (b) The defendant is ordinarily entitled to unconditional leave to defend, if the defendant raises a triable issue indicating that he/she has a fair or bona fide or reasonable defence albeit not a positively good defence. (c) The Court may in its discretion impose conditions as to the time or mode of trial including payment by the defendant or furnishing security where the triable issues raised by the defendant raises a doubt on the defendant’s good faith or the genuineness of the triable issues. (d) A frivolous or vexatious defence which does not raise any genuine triable issues shall be refused. (e) Leave to defend the Suit shall not be granted unless the defendant deposits the amount in the Court admitted by the defendant to be due from him with regard to any part of the amount claimed. 25. The principles laid down by the Supreme Court follow from the statutory provisions in Order XXXVII Rule 3 of the CPC. The enumeration of conditions by the Supreme Court reiterate that leave to defend shall be granted where the defendant raises triable issues disclosing even a plausible defence as opposed to a defence which is entirely unfounded, unsubstantiated or groundless. In other words, the defence raised must have a semblance of genuineness or one which convinces the Court that the defendant should be given an opportunity to contest the Suit on merits. The defence cannot be impossible, illogical or flimsy. 26. It is clear that the Courts have given considerable leeway to defendants to contest a Summary Suit on merits but only where the defendant comes forward with a substantial defence and raises triable issues questioning the plaintiff’s right to a Summary judgment. 27. The defence cannot be impossible, illogical or flimsy. 26. It is clear that the Courts have given considerable leeway to defendants to contest a Summary Suit on merits but only where the defendant comes forward with a substantial defence and raises triable issues questioning the plaintiff’s right to a Summary judgment. 27. In the present case, the petitioners/defendants fall short of the leniency shown by the Courts in interpreting the mandate under Order XXXVII of the CPC. In essence, the petitioners do not have any defence to the claim of the respondent/plaintiff and did not disclose any defence, substantial or plausible, to the Trial Court. Hence, the Trial Court rightly dismissed the petitioners’ I.A. for leave to defend. This Court, accordingly, does not find any merit in the CRP warranting interference with the impugned order dated 27.06.2025. 28. C.R.P.No.2661 of 2025, along with all connected applications, is accordingly dismissed. There shall be no order as to costs.