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TMI Blog2018 (1) TMI 1668X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. The Court takes an overall view of the matter at that stage, which is clearly prior to the trial of the suit, to determine whether the Defendant has a triable case or not. Order XXXVII Rule 3 of the CPC uses the terminology that the court would not refuse leave to defend unless the facts disclosed by the Defendant do not communicate that he has a substantial defence to raise or the defence intended to be put up by the Defendant is frivolous or vexatious . Thus, the proviso to Order XXXVII Rule 3 of the CPC is worded in a double negative and the Defendant has to show a substantial defence which is not frivolous or vexatious. Error in the summons by the Trial court - HELD THAT:- The Defendants were already well aware of the amount for which the Plaintiff had filed the suit as the initial summons in the suit issued on 4th July, 2014, clearly mentions the sum of ₹ 15,00,000/-. The Trial court in para 7 records that the wrong mentioning of the amount was merely a typographical error in the summons, which fact was conceded by the Defendants. Thus, this ground raised by the Defendants is not tenable. Jurisdiction - HELD THAT:- The Plaintiff is located in Delhi and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar clearly that the Defendants ought to be given an opportunity to place the evidence on record. The application for leave to defend was accompanied by an affidavit. The Court while considering the said appeal has to keep the said application in mind. Defendants are accordingly, entitled to conditional leave to defend, subject to depositing a sum of ₹ 3,00,000/- in the Trial court within 10 days, which is the difference in the amount of the cheque of ₹ 15,00,000/- and the amounts claimed to have been paid by the Defendants - List before the Trial Court on 19.02.2018. - RFA 2/2016 - - - Dated:- 31-1-2018 - PRATHIBA M. SINGH, J. For the Appellant : V.N. Chaturvedi, Advocate For the Respondent : Shalabh Gupta, Advocate JUDGMENT Prathiba M. Singh, J. 1. Himanshu Foods Private Limited (hereinafter, 'Plaintiff') filed a suit for recovery of ₹ 15,00,000/- under Order XXXVII of the Code of Civil Procedure, 1908 (hereinafter, 'CPC'). Ajanta Raj Proteins Pvt. Ltd. (hereinafter, 'Defendant') filed two applications for leave to defend under Order XXXVII Rule 3 and under Order VII Rule 11 CPC. The said applications were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g account in its books of account. As per the said statement of account, the last transaction was made by the defendants on 06.12.2011 with the plaintiff company. Thus, the present suit is within limitation. 20. That the cause of action for filing the present suit firstly arose in favour of the plaintiff and against the defendants on 10.05.2011 when the cheque issued by the defendants in favour of the plaintiff got dishonoured. The cause of action further arose on various occasions when the plaintiff sent several reminders to the defendants to make the payment and the defendants avoided to clear their dues. The cause of action further arose on 06.12.2011 when the last transaction was made by the defendants with the plaintiff. Since till date no payment has been made by the defendants to the plaintiff w.r.t. the cheque in question, the cause of action is still subsisting and continuing. Defendant's case 5. In their leave to defend, the Defendants raised the following defences: (i) that the summons for judgment was issued only for a sum of ₹ 4,09,089/- and not for a sum of ₹ 15,00,000/-; (ii) that the suit was beyond limitation as the period of limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment already made. Apart from this, the defendant even tried to raise the case that infact, even defendant company had been supplying milk powder to plaintiff, and it is plaintiff who had not paid their dues to the extent of ₹ 8,60,000/-. Though all this is mentioned in para 8 of this application, surprisingly, even this contention is not supported by even a single document. Neither copies of invoices vide which product alleged to have been supplied by plaintiff have been filed, or even the bank entries showing the payment vide three cheques mentioned in para 8 of this application have been filed. 8. The Trial court held that the Defendants ought to have filed some supporting documents to show that their defence was not an eye wash. The Trial court also noted that if Defendants' claim for a sum of ₹ 8,60,000/- was due from the Plaintiff, there is not even a notice sent to the Plaintiff seeking recovery of the said amount much less a suit for recovery being filed. Due to all these circumstances, the Trial court held in favour of the Plaintiff and decreed the suit. Analysis and Findings 9. Order XXXVII of the CPC lays down procedure for summary tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to leave to sign judgment, and the Defendant is entitled to unconditional leave to defend the suit; b) if the Defendant raises 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 genuineness 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 is 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 securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued by the Defendants was drawn on Axis Bank. The suit has been instituted on 8th May, 2014. Thus, it is filed within three years of the date of dishonour of the cheque, but beyond three years from the date of cheque. The Defendant argues that the limitation has to be construed from the date of the cheque and not the date of dishonour. 17. The Defendants place heavy reliance on the judgment of the learned Single Judge of this court in Empire Home Appliances Pvt. Ltd. v. Suraj Enterprises (dated 3rd May, 2016 in RFA 208/2016) (hereinafter, 'Empire Home Appliances'). In the said case, the Court held as under: 27. In the aforesaid light, there cannot be said to be any inconsistency in the judgments relied upon by the counsel for the appellant/plaintiff and the judgments to which his attention was drawn by me. Unlike the present case where the appellant/plaintiff to bring the suit within limitation has to necessarily rely to Section 18 and/or 19 for extension of limitation, Steel Authority of India Ltd. supra was not concerned therewith; that was a case of a suit for recovery of amount which was subject matter of cheque simpliciter. Similarly, Jhang Biradari Housing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erit.... 20. The Division Bench in Rohini Strips (supra), observing that there was no illegality in the Single Judge's order, notes that the cause of action did not arise till the cheques were dishonoured. The Court held: 4. We find no illegality in the aforesaid order. The cheques were given by the appellants to the respondent only on 16.3.2000. The aforesaid cheques were to be encashed after presentation in terms of Section 64 of the Negotiable Instruments Act, 1881. The cause of action in the suit was dishonour of the cheque and not merely issuance of the cheque. On the issue of cheque, the suit could not have been filed. Only on dishonour of the cheques that the right to sue accrued. The said cheques were returned back to the respondent unpaid on the ground not arranged for on 1.6.2000 and, therefore, the period of limitation would start running from the said date. The suit was filed on 23.5.2003. The suit was within the limitation would start running from the said date. The suit was filed on 23.5.2003. The suit was within the period of limitation consequently the aforesaid findings recorded by the learned Single Judge in respect of the plea of limitation cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties relates to supply of skimmed milk powder, the suit is a simple suit under Order XXXVII of the CPC based on a cheque. The cheque was valid on the date it was presented. It was returned due to 'insufficient funds'. It is the Defendants' contention that the cheque for ₹ 15,00,000/- has been issued as a security, however, there is no document to this effect. The Plaintiff simply submits that the cheque in question was dishonoured and that gave it a cause of action to file the suit for recovery. The cause of action arose only when the cheque was dishonoured and hence the suit is filed within limitation. (iv) Payment made 24. The application for leave to defend filed by the Defendant seeks the following prayer: PRAYER Keeping in view the above said facts and circumstances, and in the interest of justice, it is therefore, most respectfully prayed that this Hon'ble Court may be pleased to grant unconditional leave to defend to the defendants to contest the above said suit and a primary issue of limitation be framed in the present suit. Any other order or direction which this Hon'ble Court deem fit and proper may also be passed in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 15 lakhs. In the reply to the leave to defend, there is a mere bald denial of the receipt of these payments and the effect thereof is not clear. The Plaintiff does not say that despite the above 3 payments being made, the amount of ₹ 15 lakhs is still due. Thus, the Defendant ought to be given an opportunity to take credit for the payments made, if any, and get the outstanding amount reconciled. This can happen only if leave to defend is granted. This is not a case where the averments are completely vexatious or frivolous. The details of payments made do seem to be credible at this stage, subject to the same being proved in trial. The Defendants, though did not file any documents with the leave to defend application, have placed on record in this appeal, a bank statement to support the payments made as enumerated in para 8 of the application. It does appear clearly that the Defendants ought to be given an opportunity to place the evidence on record. The application for leave to defend was accompanied by an affidavit. The Court while considering the said appeal has to keep the said application in mind. 28. It would be apt to quote the dictum of the Supreme Court in Santos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. The facts given in the affidavit are clear and precise, the defence could hardly have been clearer. We find it difficult to see how a defence that, on the face of it, is clear becomes vague simply because the evidence by which it is to be proved is not brought on file at the time the defence is put in. The learned Judge has failed to see that the stage of proof can only come after the defendant has been allowed to enter an appearance and defend the suit, and that the nature of the defence has to be determined at the time when the affidavit is put in. At that stage all that the Court has to determine is whether if the facts alleged by the defendant are duly proved they will afford a good, or even a plausible, answer to the plaintiff's claim. Once the Court is satisfied about that, leave cannot be withheld and no question about imposing conditions can arise; and once leave is granted, the normal procedure of a suit, so far as evidence and proof go, obtains. The learned High Court Judge is also in error in thinking that even when the defence is a good and valid one, conditions can be imposed. As we have explained, the power to impose conditions is only there to ensure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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