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2025 DIGILAW 387 (MAD)

R. Radha @ Radha Ramalingam v. Madhan Raj

2025-01-21

K.R.SHRIRAM, SENTHILKUMAR RAMAMOORTHY

body2025
JUDGMENT : Senthilkumar Ramamoorthy, J. On the ground that loans advanced by the respondent herein were not repaid by the appellant(s), the respondent filed two suits before the Commercial Court, Salem. In C.O.S.No.25 of 2022, the respondent/plaintiff claimed a sum of Rs.4,52,15,725/-, which included the principal sum of Rs.3,41,00,000/-. The sole defendant therein is the appellant in Appeal (CAD) No.12 of 2023. In C.O.S.No.26 of 2022, the respondent/plaintiff claimed a sum of Rs.1,20,74,401/-, which included the principal claim of Rs.90,00,000/-. The defendants therein are the appellants in Appeal (CAD) No.13 of 2023. 2. The appellant(s) herein did not file the written statements within the specified time limit from the date of receipt of the suit summons. However, the written statements in both the suits were filed within the outer limit of 120 days; the applications to condone the delay in filing the written statements were allowed; and the written statements were received. The appellant(s), however, did not append the statement of truth to the written statements as required under Order VI, Rule 15A of the Code of Civil Procedure, 1908 (the CPC), as applicable to commercial disputes under the Commercial Courts Act, 2015 (the Commercial Courts Act). In those circumstances, the Court refused to rely on the pleading by applying sub-rule (4) of Rule 15A of Order VI of the CPC. Evidence was adduced by examining the respondent/plaintiff as P.W.1 in both the suits and several documents were exhibited, including the relevant promissory notes, cheques and cheque return memos. In both the suits, P.W.1 was cross-examined on behalf of the respective appellant(s)/defendant(s). The attester and scribe of the promissory notes was examined as P.W.2. From the record, it appears that P.W.2 was not cross-examined on behalf of the defendant(s). 3. Since the respective written statement was not taken into consideration on account of non-verification, the Court did not consider it necessary to frame issues. The Court, however, formulated the following points for consideration: (1) Whether this Court has the territorial jurisdiction to entertain the present suit? (2) Whether the suit is barred by limitation? (3) Whether the plaintiff is entitled for recovery of the amount from the defendant(s) as prayed? 4. The trial Court held that it had territorial jurisdiction and that the dispute was a commercial dispute as per section 2(1)(c)(i) of the Commercial Courts Act. (2) Whether the suit is barred by limitation? (3) Whether the plaintiff is entitled for recovery of the amount from the defendant(s) as prayed? 4. The trial Court held that it had territorial jurisdiction and that the dispute was a commercial dispute as per section 2(1)(c)(i) of the Commercial Courts Act. It was further held that the suit is not barred by limitation because the suits were presented within three years from the dates of the respective promissory notes. As regards the third point for consideration, namely, whether the plaintiff is entitled to the amount claimed from the defendant(s), the Court took note of the documentary evidence in the form of cheques, cheque return memos and promissory notes. By relying upon the presumptions under Sections 118 and 139 of the Negotiable Instruments Act, 1881 (the NI Act), the Court concluded that the rebuttable presumption raised in favour of the plaintiff was not rebutted by the defendant(s). On such basis, the suits were decreed. 5. Learned Senior Counsel for the appellant(s) assails the judgments and decrees on multiple grounds. The first ground of challenge is that Section 12A of the Commercial Courts Act was not complied with. The second ground of challenge is that the respective written statement of the appellant(s) was not taken into consideration in spite of the same being filed within the outer time limit of 120 days. By relying upon the judgment of this Court in Kamal Haasan and another v. Regent Saimira Entertainment Limited and another, 2022 (3) CTC 337, he contended that the legislature did not prescribe striking out of the defence as a necessary consequence of non-filing of an affidavit of verification. He placed reliance on paragraphs 37 and 40 of the judgment in support of this proposition. 6. As a consequence of not taking into consideration the written statement, learned Senior Counsel contended that grave prejudice was caused to the appellant(s), including by not being able to adduce evidence. 7. In response to these contentions, learned counsel for the respondent/plaintiff submits that the respective written statement of the appellant(s) did not deal with the facts by denying the averments in the plaint. Instead, he contends that the respective written statements merely raised legal issues and were in the nature of written submissions. 7. In response to these contentions, learned counsel for the respondent/plaintiff submits that the respective written statement of the appellant(s) did not deal with the facts by denying the averments in the plaint. Instead, he contends that the respective written statements merely raised legal issues and were in the nature of written submissions. This contention was, however, refuted by learned Senior Counsel for the appellant(s) by referring to and relying upon paragraphs 19, 20 and 37 of the respective written statements. 8. The first question that arises for determination in light of these contentions is whether the objection with regard to non-compliance of Section 12A of the Commercial Courts Act warrants acceptance. On examining the respective written statements, it appears that such plea was not raised therein, whereas, it is raised in these appeals. It also appears from the records that the plaintiff pleaded urgency in the respective plaint; filed applications for urgent hearing of each suit; and also filed an interlocutory application in each suit to furnish security for the suit claim and for attachment of the assets of the defendant in the event of default. In the affidavit in support of such applications, the necessity of urgent relief has been stated. By orders dated 09.12.2022, the respective application was effectively allowed by making the attachments of specific immovable properties of the respective appellant(s) absolute. 9. In Yamini Manohar v. T.K.D. Keerthi, (2024) 5 SCC 815 , the Supreme Court concluded that it is not necessary to comply with the pre-institution mediation obligation in Section 12A of the Commercial Courts Act, if the suit contemplates urgent interim relief and that the role of the Court would be to examine whether the plaintiff has filed the interlocutory application solely with a view to circumvent such requirement in Section 12A of the Commercial Courts Act. Therefore, the contention on the basis of Section 12A of the Commercial Courts Act is rejected. 10. As regards the non-consideration of the written statement, the trial Court concluded that the party concerned should not be permitted to rely on the pleading in such a situation. Therefore, the contention on the basis of Section 12A of the Commercial Courts Act is rejected. 10. As regards the non-consideration of the written statement, the trial Court concluded that the party concerned should not be permitted to rely on the pleading in such a situation. Sub-rules (4) and (5) of Rule 15A of Order VI of the CPC, which are relevant, are as under: “(4) Where a pleading is not verified in the manner provided under sub-rule (1), the party shall not be permitted to rely on such pleading as evidence of any of the matters set out therein. (5) The Court may strike out a pleading which is not verified by a Statement of Truth, namely, the affidavit set out in the Appendix to this Schedule.” From the plain language of sub-rules (4) and (5), it appears that sub-rule (4) is mandatory, whereas sub-rule (5) is discretionary. On examining these provisions, a learned Judge of this Court in Kamal Haasan, supra, reached a similar conclusion. In these circumstances, the conclusion that appellant(s) cannot rely on the respective written statements is in conformity with statute and we find no infirmity in such conclusion. We, however, are of the view that it would have been appropriate in the interest of justice for the trial Court to set a time line for the appellant(s) to file the statement of truth instead of disregarding the pleading on that count. 11. Notwithstanding the above conclusion, the contention of learned counsel for the respondent that there was no denial of the averments in the plaint in the respective written statements should be examined. On going through the written statements, it is noticeable that the averments in paragraphs 1 to 18 thereof and, indeed in most other paragraphs too, are entirely in the nature of legal submissions, particularly relating to whether the dispute qualifies as a commercial dispute in terms of Section 2(1)(c) of the Commercial Courts Act. Paragraphs 19, 20 and 37, which were relied upon by learned Senior Counsel for the appellant(s) are as under: “19. On purely the questionable nature and inadmissible documents the suit has been filed. Hence, there is no liability cast on the defendant to pay any amount to the plaintiff much less the suit amount. There is no consideration passed to the defendant as stated in the plaint. 20. On purely the questionable nature and inadmissible documents the suit has been filed. Hence, there is no liability cast on the defendant to pay any amount to the plaintiff much less the suit amount. There is no consideration passed to the defendant as stated in the plaint. 20. This defendant questions the genuineness of the documents filed along with the plaint and states that the plaint documents are not admitted. They are fabricated, deceptive and fraudulent documents which are filed so as to trouble this defendant, they are questionable documents. ... 37. Further, the cheques referred to in the 'cause of action' and in the plaint were of very old period as issued by the concerned bank. They were issued way back in the year 2015 by the bank and somewhere in the period between April and September 2015. The said cheques were atleast six years old on the date of the presentation to the bank. Further, the earlier numbered cheque were encashed by respective holders at least 6 years ago from the date of the plaint. Hence, it will be highly improbable for a Money-Lender to accept the cheque of a person whose accounts were already frozen under SARFAESI Proceedings, widely published all over Namakkal and Salem District Newspapers such as Dina Malar”, 'Daily Thanthi' etc. and in English Papers. Under such circumstances, it will be highly improbable that a person like the plaintiff to accept any cheque on the dates mentioned by the plaintiff.” 12. These paragraphs do not deal specifically with material documents, such as the promissory notes or the cheques. Instead, broad and general statements are made that the documents are not admitted and that they are fabricated, deceptive and fraudulent. In paragraph 37, it is stated that the cheques were issued way back in the year 2015 and that it would be highly improbable for a money-lender to accept such cheques. The CPC, especially in its application to commercial disputes, mandates that pleadings should be specific and not generic. In this connection, Rule 3A(2) and (3) and the second proviso to Rule 5 of Order VIII of the CPC, as applicable to commercial disputes, read as under: “3A. The CPC, especially in its application to commercial disputes, mandates that pleadings should be specific and not generic. In this connection, Rule 3A(2) and (3) and the second proviso to Rule 5 of Order VIII of the CPC, as applicable to commercial disputes, read as under: “3A. Denial by the defendant in suits before the Commercial Division of the High Court or the Commercial Court - (2) The defendant in his written statement shall state which of the allegations in the particulars of plaint he denies, which allegations he is unable to admit or deny, but which allegations he is unable to admit or deny, but which he requires the plaintiff to prove, and which allegations he admits. (3) Where the defendant denies an allegation of fact in a plaint, he must state his reasons for doing so and if he intends to put forward a different version of events from that given by the plaintiff, he must state his own version. ... Provided further that every allegation of fact in the plaint, if not denied in the manner provided under Rule 3A of this Order, shall be taken to be admitted except as against a person under disability” 13. The written statements of the respective appellant(s) do not appear to satisfy the above statutory requirements. We, therefore, find that the contention of learned counsel for the respondent that the defendant has failed to deny the factual assertions in the plaint carries considerable merit. We also find that the trial Court, in the impugned judgments, took note of and recorded the averments in the respective written statements before concluding that the appellant(s) cannot be permitted to rely on the same. Even if the written statements of the respective appellants had been considered, for reasons aforesaid, it appears that it would not per se have had a material impact. On account of the lapse of the 120 day limit, it is also no longer possible for the appellant(s) to modify the respective written statements. In this context, the trial Court examined the evidence and concluded that the statutory presumption under the NI Act had not been rebutted. These conclusions are reasonable and, ordinarily, we would not have interfered with the same. 14. Nonetheless, we are mindful that the breach with regard to non-filing of statement of truth is curable. In this context, the trial Court examined the evidence and concluded that the statutory presumption under the NI Act had not been rebutted. These conclusions are reasonable and, ordinarily, we would not have interfered with the same. 14. Nonetheless, we are mindful that the breach with regard to non-filing of statement of truth is curable. If provided an opportunity, the possibility of the respective appellant(s) adducing material contra evidence also cannot be ruled out. We are, therefore, of the view that the respective appellant(s) should be provided an opportunity to contest the suits on merits, albeit by putting the respective appellant(s) on terms. In view of the appellant(s) not having specifically denied the averments in the plaint, we conclude that the appropriate balance between the rights of the contesting parties would be struck if the respective appellant(s) deposits the principal suit claim in the respective suit as a condition for remand. Therefore, solely in order to provide an opportunity to the respective appellant(s) to defend the suits more effectively, we dispose of these appeals on the following terms and conditions: (a) The appellant(s)/defendant(s) shall deposit a sum of Rs.3,41,00,000/- (Rupees Three Crore Forty One Lakhs only) to the credit of C.O.S.No.25 of 2022 on the file of District Judge, Commercial Court at Salem. (b) The appellant(s)/defendant(s) shall deposit a sum of Rs.90,00,000/- (Rupees Ninety Lakhs only) to the credit of C.O.S.No.26 of 2022 on the file of District Judge, Commercial Court at Salem. (c) The above deposits shall be made within four weeks from the date of this judgment being uploaded on the website. If deposited, the amounts shall, in turn, be placed in interest bearing fixed deposits which shall be renewed until disposal of the suits upon this remand. (d) In the event of default in making the deposits as directed above, the appeals shall stand dismissed ipso facto without reference to this Court. (e) Subject to the deposits being made, the judgments and decrees in Commercial Original Suit Nos. 25 and 26 of 2022 shall be set aside and consequently both suits shall stand remanded and restored on the file of the jurisdictional trial Court for hearing and disposal on the basis of existing pleadings. (f) Upon making the above deposits, the respective appellant(s) are also granted leave to seek modification of the earlier orders of attachment, which shall be considered on merits by the jurisdictional trial Court. (f) Upon making the above deposits, the respective appellant(s) are also granted leave to seek modification of the earlier orders of attachment, which shall be considered on merits by the jurisdictional trial Court. (g) Hearing shall be conducted after providing an opportunity to the respective appellant(s) to file a statement of truth verifying the respective written statements. (h) The evidence recorded earlier shall be relied on. In addition, the respective defendants shall be permitted to adduce evidence if they file statements of truth verifying existing pleadings. (i) In case the suits are restored, the jurisdictional trial Court shall endeavour to dispose of the same within six months. (j) There shall be no order as to costs. (k) Consequently, connected miscellaneous petitions are closed.