2005 (8) TMI 718 - HC - Indian Laws

Summary

Issues Involved:
1. Recovery of dues under Order 37 of the Code of Civil Procedure (CPC).
2. Applications for leave to defend the suit.
3. Application for condonation of delay in filing leave to defend.
4. Application for injunction against the defendants.
5. Claim for interest on the principal amount.

Issue-wise Detailed Analysis:

1. Recovery of dues under Order 37 of the Code of Civil Procedure (CPC):
The plaintiff, a company engaged in the manufacture, marketing, and sale of flavors and fragrances, filed a suit for recovery of Rs. 27,70,832/- under Order 37 of the CPC. The defendants, a partnership firm, had approached the plaintiff for supply, which was made, and cheques were issued by the defendants. These cheques were dishonored due to insufficient funds. Despite assurances and issuance of fresh cheques, the dues remained unpaid. The plaintiff claimed the amount based on a written contract and dishonored cheques, asserting that the claim was within the purview of Order 37.

2. Applications for leave to defend the suit:
Defendant No. 2 filed an application under Order 37 Rule 3(5) read with Section 151 CPC seeking unconditional leave to defend the suit. Defendant No. 3 also filed a similar application along with an application for condonation of delay. The court examined whether the defendants were entitled to unconditional leave to defend or if an injunction against their property was warranted. The court noted that the defendants made vague denials and failed to provide substantial evidence or correspondence to support their claims of defective goods or non-receipt of goods. The court found the defense to be frivolous and vexatious, thus denying the leave to defend.

3. Application for condonation of delay in filing leave to defend:
Defendant No. 3, a widow of the erstwhile partner, sought condonation of a seven-day delay in filing the application for leave to defend, citing personal reasons and illness of her daughter. The court, considering the peculiar facts and circumstances, condoned the delay, allowing the application for leave to defend to be decided along with that of Defendant No. 2.

4. Application for injunction against the defendants:
The plaintiff filed an application under Order 39 Rules 1 & 2 CPC to restrain the defendants from selling or transferring certain property. Defendant No. 2 made a statement in court that they would not transfer or create third-party interest in the property. Based on this statement, the court found no further orders necessary and disposed of the application.

5. Claim for interest on the principal amount:
The plaintiff claimed interest at 24% per annum, but the court found no written contract or document supporting this claim. The court emphasized that claims under Order 37 must be based on written contracts, and in the absence of such a contract for interest, the claim was declined. However, the court awarded interest at 6% per annum from the date of institution of the suit till realization of the principal amount of Rs. 19.5 lacs, along with the costs of the suit.

Conclusion:
The court dismissed the applications for leave to defend filed by Defendants 2 and 3, finding no substantial defense. The plaintiff was entitled to a decree for Rs. 19.5 lacs with 6% interest per annum from the date of the suit till realization, and the costs of the suit. The applications related to condonation of delay and injunction were disposed of accordingly.