Ms. Akanksha Mehra Ms.Priya Jha, Advocates. and v. HARISH KUMAR

CORAM: HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD HON'BLE MR. JUSTICE HARISH VAIDYANATHAN SHANKAR J U D G M E N T (ORAL) HARISH VAIDYANATHAN SHANKAR, J. 1. The present appeals are being disposed of by this common Order, as both involve the same set of Appellants, though the Respondents are different. The issues raised, however, are substantially identical, and both appeals arise out of similar factual matrices and involve common Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 questions of law. For the sake of brevity and to avoid repetition, a common Order is being passed. The facts of each case, wherever necessary, shall be referred to separately. 2. The present appeals under Section 96 of the Code of Civil Procedure, 1908 [“CPC”] read with Section 13 of the Commercial Courts Act, 2015 challenge the two separate Judgments and Decrees dated 23.08.2022 [“Impugned Judgements”] passed by the learned District Judge (Commercial Court), North District, Rohini, Delhi [“learned Trial Court”] in CS (Comm.) No.422/2019 and CS (Comm.) No.421/2019 filed by the Respondents, Mr. Harish Kumar and Mr. Pritam Das, respectively. Vide the Impugned Judgments, the learned District Judge has disposed of the two different applications under Order XXXVII Rule 3(5) of the CPC filed by the Appellants herein and decreed the suits in favour of the Respondents herein. BRIEF FACTS 3. Shorn of unnecessary details, the common brief facts which are necessary for the adjudication of the present appeals are as follows: I. II. III. Appellant No.1, i.e. M/s New J.K. Fruits, is a partnership firm with four partners, and three of them are arrayed as Appellant Nos. 2, 3 & 4 in the present appeals. The Appellants are in the business of selling fruits in New Subzi Mandi, Azadpur, Delhi. RFA (COMM) 98/2022 A. The Respondent - Mr. Harish Kumar is the proprietor of M/s Nav Jyot Fruit Traders, who is in the business of selling fruits and is situated in the same marketplace as the Appellant herein, i.e. New Subzi Mandi, Azadpur, Delhi. B. The Respondent herein, Mr. Harish Kumar, had filed suit being CS (Comm.) No.422/2019, on the Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 strength of two promissory notes dated 31.12.2018 and 05.02.2019 that had been executed in his favour by the Appellant No. 2 herein for himself as well as on behalf of Appellant Nos. 1 - Firm and Appellant Nos. 3 and 4, being partners of the same. The details of the said promissory notes are as follows: IV. RFA (COMM) 99/2022 A. The Respondent - Mr. Pritam Das is proprietor of M/s Pratam Das Chiman Das, who is in the business of selling fruits and is situated in the same market place as the Appellant herein, i.e. New Subzi Mandi, Azadpur, Delhi. Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 B. The Respondent, Mr. Pritam Das, had filed suit being CS (Comm.) No.421/2019), on the strength of two promissory notes dated 06.04.2019 and 17.04.2019 that had been executed in his favour by the Appellant No. 2 herein for himself as well as on behalf of Appellant Nos. 1 - Firm and Appellant Nos. 3 and 4, being partners of the same. The details of the said promissory notes are as follows: V. The learned Trial Court, after examining the various aspects of the matter, has delivered the Judgment on the following terms: Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 “.......9. The basic judgment laying down the principles of dealing with the application for leave-to-defend delivered by the Hon’ble Supreme Court is M/s Mechalec Engineers and Manufactures Vs. M/s Basic Equipment Corporation , AIR 1977 Supreme Court 577. In para 8, the Hon’ble Supreme Court has held as follows:- “In Smt. Kiranmoyee Dassi Vs. Dr. J. Chaterjee, (19545) 49 Cal WN 246 at p. 253, Das. J. after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by Order 37 CPC in the form of the following propositions (at p.253) (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 judgment and unconditional leave to defend. the defendant is entitled (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 shows 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 illusry or sham or practically moonshine then ordinarily the plaintiffs 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 illusry 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.” Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022

10. From the law laid down by the Hon’ble Supreme Court it can be discerned that while deciding application for gram of leave to defend under Order XXXVII Rule 3(5) of CPC, the court is required to see as to whether the facts brought to the notice by the defendant by way of affidavit or otherwise, are sufficient to entitle him to defend the suit. If the defendant is able to satisfy the court that he has a good defence on merits then the plaintiff is not entitled to leave to sign the judgment and an unconditional leave-to-defend can be granted to the defendant. Where the defendant raises a triable issue indicating that he has a fair, bona fide or reasonable defence although not a positive good defence, the defendant can still be granted unconditional leave to defend. However, where the defendant has no defence or defence set up is illusory, sham and practically a moonshine, the plaintiff would be entitled to leave to sign the Judgment and leave to defend can be refused to the defendant.

11. ln the instant case, the contentions of the defendants with regards to Sh. Riyaz Ahmad Thokar as one of the partners of defendant no. 1 firm and his deliberate non-impleadment as a defendant in this suit by the plaintiff appear to be self contradictory. On one hand, it is claimed by the defendants that the plaintiff was having complete knowledge about the fact that Sh. Riyaz Ahmad Thokar is also one of the partners of defendant no. 1 firm whereas on the other hand, it is stated by them that they and the plaintiff are not known to each other at all and did not have any business relations at any point of time. When, as per the statement of defendants themselves in the application for leave-to-defend, they were not known to the plaintiff, it is not understandable as to how they impute knowledge to the plaintiff that the defendant no. 1 firm was having four partners including Sh. Riyaz Ahmad Thokar. Further on one hand, the defendants contend that Sh. Riyaz Ahmad Thokar should have been arrayed as a defendant in this suit whereas on the other hand, it is claimed by them that the plaintiff has filed the suit in collusion with said Sh. Riyaz Ahmad Thokar by misusing the promissory notes in question. If in fact, that is the case, the defendants cannot claim that Sh. Riyaz Ahmad Thokar should have been impleaded as a defendant in this suit.

12. Perusal of the averments made in the plaint nowhere indicate that the defendant no. 2, 3 and 4, who are stated to have approached the plaintiff for purchase of fruits on behalf of defendant no. 1, had disclosed to the plaintiff about fourth partner, namely, Sh. Riyaz Ahmad Thokar also. ·It appears that in the absence of any such intimation given to the Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 the assumption plaintiff, he has proceeded with defendant no. 2, 3 and 4 are the only three partners of defendant no. 1 firm and entered into transactions with them and accordingly filed the instant suit against them. It is nowhere in the case of the defendant no. 2, 3 and 4 that they supplied the copy of the partnership deed to the plaintiff.

13. ln view of these facts and circumstances, the suit cannot be held to be bad for non-joinder of Sh. Riyaz Ahmad Thokar is the defendant in this case.

14. The defendants claim that they had never entered into any business transactions with the plaintiff and the plaintiff has filed a false and frivolous suit on the strength of stolen/lost promissory notes which he has himself filled up. It is not disputed that the two promissory notes in question bear the genuine signatures of defendant no. 2 Tulsi Das. It is contended that a bag containing signed blank cheques and signed blank promissory notes was lost by defendant no. 4 in the month of May, 2019 which may have been found/stolen by the plaintiff and upon filling up the two promissory notes, has misused the same by filing the instant suit. It is a normal practice that a person, whose signed cheques/instruments are lost or misplaced, immediately informs his banker about the same so as to stop the misuse of the cheques. He is also expected to get a notice published in this regard in a newspaper in order to stop misuse of the signed blank the defendants neither promissory notes. Admittedly, intimated their banker about the lost/misplacement of the signed blank cheques nor issued any notice in any newspaper to inform the general public about the loss/misplacement of the signed blank promissory notes. Further, if the defendants were of the impression that the bag lost by defendant no. 4 was found/stolen by the plaintiff, they were also expected to lodge FIR against him for the theft of promissory notes and for committing forgery upon those promissory notes by filling up those in his own name. That also has not been done by the defendants.

15. It is intriguing as to why the defendant no. 4was roaming around with a bag containing signed blank cheques and signed blank promissory notes. The defendants have tried to explain that defendant no. 4 used to do so for business purposes. The nature and extent of the business of the defendants which may require carrying of signed blank negotiable instruments on daily basis has nowhere been explained in the entire application. It is very difficult to believe that a person would carry blank signed negotiable instruments in today’s age also when there are several modes Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 of transfer of money apart from cheques and promissory notes.

16. lt may also be noted here that in case it is presumed that the bag containing signed negotiable instruments was lost by defendant no. 4, it cannot be believed, being highly unlikely and improbable, that the same would have been found by the plaintiff.

17. There is one more aspect which needs to be noted. Before filing the suit, the plaintiff has sent a legal notice dated 26.07.2019 to the defendants calling upon them to pay the sum of Rs. 4 Lakhs along with interest. It was sent to all the four defendants separately. Original postal receipts as well as the printouts of the tracking report has been filed along with the plaint. Perusal of the postal receipts reveals that the notice was sent separately to all the four defendants. Perusal of the tracking reports reveals that the registry envelope containing the notice was delivered to all the four addressees i.e. all the four defendants. Therefore, it shall be deemed that the legal notice was duly served upon all the defendants. None of the defendants has bothered to send reply to the plaintiff to the said notice. In case the contentions raised by the defendants in the application under disposal were true, they would have immediately sent reply to the said legal notice of the plaintiff denying their liability towards the plaintiff on the grounds as stated in the application. The defendants would not have permitted to go out of hand this first possible opportunity to deny their liability towards the plaintiff. Such conduct of the defendants, undoubtedly indicates that the pleas taken by them in the instant application are totally concocted and fabricated.

18. In view of the above discussion, the defence raised by the defendants by way of instant application appears to be absolutely concocted, sham and not inspiring the confidence of the court at all. It is manifest that the defendants have not raised any triable issue entitling them to leave-to-contest the suit.

19. Hence, no merit is found in the application. Same is hereby dismissed.” CONTENTIONS OF THE APPELLANTS 4. The Appellants herein impugn the Judgments primarily on the following grounds: Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 (i) It is the case of the Appellants that the Respondents have not produced any proof in respect of the business transactions which led to the issuance of promissory notes. It is, in fact, the case of the Appellants that there was no business transacted between the parties herein. (ii) It is further contended by the Appellants that the promissory notes have, in fact, been obtained by the Respondents herein illegally and it is also their contention that the means by which the said promissory notes had been obtained could either be (a) by having somehow being able to find the lost bag containing cheques and promissory notes; or (b) the fourth partner, namely, Mr. Riyaz Ahmed Thokar, having provided the same to the Respondents herein meaning thereby that the suit was collusive in nature. (iii) It is orally contended by the Appellant that the said promissory notes were merely signed by the Appellant No. 2 and no particulars had been filled up therein. (iv) The Appellants also state that the suit itself was wrongly filed as it suffered from non-joinder of parties due to non- addition of Mr. Riyaz Ahmed Thokar as a Defendant in the said suit. (v) To summarise, the Appellants impugn the Judgment and Decrees on the ground that there was no business relationship; there was no evidence of any transaction having taken place between the parties herein; and no invoices etc. were produced in support of the same. The Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 Respondents had somehow managed to get a hold of the lost bag which contained cheques and promissory notes, and had misused the same for filing the suit, or they had in collusion with Mr. Riyaz Ahmed Thokar managed to procure certain promissory notes which were then used in an illegal manner to form the basis of the suit filed by the Respondents before the learned Trial Court. (vi) It is also the case of the Appellants that the suit is bad for non-joinder of Mr. Riyaz Ahmed Thokar as a Defendant in the array of the parties. CONTENTIONS OF THE RESPONDENTS 5. Per contra, the learned counsel for the Respondents took support of the Impugned Judgments and Decrees dated 23.08.2022 passed by the learned Trial Court, and contend that the promissory notes speak for themselves and there is no denial that the same was not signed by the Appellant No. 2. 6. The learned counsel for the Respondents would also state that the defence is absolutely unbelievable and nothing but moonshine, and that in fact, no plausible defence was available, and there was no triable issue; as such, the suit was rightly decreed without granting leave to defend. ANALYSIS 7. We have heard the learned counsel for the parties and have perused the Impugned Judgments and are of the firm opinion that the same do not bear any interference of this Court. The conclusion of the learned Trial Court with respect to the contention that there was no Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 business transaction as between the parties has been discussed in para 14 of the Impugned Judgments. The learned Trial Court has, in detail, discussed the issue as to the entire story of the alleged lost bag, which apparently contained signed blank cheques and signed blank promissory notes. It bears note that the said aspect about the alleged blank promissory notes does not find mention in the pleadings of the present appeals. However, the same is averred in para “G” of the Appellant’s application for leave to defend. 8. The learned Trial Court has, in its discussion regarding this aspect, clearly noted that there is no information to the banker about the cheques having gone missing or having been stolen. There is also no notice or publication issued by the Appellants in respect of such lost signed blank promissory notes, which undoubtedly could have been misused by any person. The learned Trial Court has further commented on the manner in which the Appellant No. 4 was apparently carrying a bag full of signed blank cheques and signed promissory notes, an aspect which has not been explained by the Appellants. 9. We are in agreement with the findings of the learned Trial Court. It is indeed extremely surprising that no complaint or information was ever given, either to the Bank or to the public at large, regarding the loss of any signed blank cheques or signed blank promissory notes. It is quite apparent that the same is nothing but a moonshine defence that is now sought to be placed before the Court only to deny the Appellants’ liability to make payments. The loss of signed cheques is a significant event and the absence of any communication in this respect to the concerned Bank is certainly something that is not expected, especially from persons like the Appellant herein who are expected to be fairly Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 acquainted with the rigors of Section 138 of the Negotiable Instruments Act, 1881, and its consequences. The same would also hold true for the alleged blank promissory notes which are alleged to have gone missing. 10. With respect to the alleged non-addition of Mr. Riyaz Ahmed Thokar as a Defendant, it would be apposite to note that the promissory notes are in fact pre-dating the addition of Mr. Riyaz Ahmed Thokar as a partner in the partnership firm. 11. It is, however, pertinent to note that the learned Trial Court has rightly pointed the discrepancies in the statements of the Appellants herein before the learned Trial Court. The same is reflected at para 11 of the Impugned Judgements wherein it is noted that on one hand, it was the claim of the Appellants herein that the Respondents had complete knowledge about the fact that Sh. Riyaz Ahmad Thokur was also a partner in Appellant No. 1 firm. However, on the contrary, the Appellants herein had also stated before the learned Trial Court that the Appellants and the Respondents were not known to each other at all and did not have any business relations at any given point in time. The said contradiction is also clearly reflected in the application for leave to defend preferred by the Appellants herein, wherein they had stated that they were not known to the Respondents herein, thereby making it unclear as to how the Appellants impute knowledge to the Respondents that the Appellant- firm was having four partners, including Sh. Riyaz Ahmad Thokar. Further, on one hand, the Appellants had contended that Sh. Riyaz Ahmad Thokar should have been arrayed as a defendant in this suit before the learned Trial Court, however, on the other hand, it was claimed by Appellants that the Respondents had filed the suit in collusion with the said Sh. Riyaz Ahmad Thokur by misusing the Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 promissory notes in question. It is therefore rightly held by the learned Trial Court that if in fact that was the case, the Appellants could not have claimed that Sh. Riyaz Ahmad Thokar should have been impleaded as a defendant in said suit. 12. The learned Trial Court has also, while analysing this aspect, discussed the fact that the Appellants, themselves, have never disclosed to the Respondents about the fourth partner or that they had supplied a copy of Partnership Deed to the Respondents herein. 13. Be that as it may, the fact that the promissory notes in question have admittedly been signed by one of the Appellants on behalf of the Appellant No. 1 - Firm, binding all the partners thereof, it would appear that the Appellants are only seeking to gain some mileage from the fact that there has been a non-joinder of the said Mr. Riyaz Ahmed Thokar and contend that the same was deliberate. 14. The learned Trial Court has also, in para 17 of the Impugned Judgments, referred to the fact that the Respondents herein had issued legal notices dated 26.07.2019, calling upon the Appellants to pay the sums as set out in the promissory notes. However, the Appellants had chosen not to respond to the same. The learned Trial Court, therefore, concluded that if the defence now sought to be raised by the Appellants in their application for leave to defend were genuine, they ought to have raised such defence, at the very least, in their reply to the said legal notice. The learned Trial Court also concluded that the fact that they chose not to do so only confirms that the defence sought to be raised in the application for leave to defend is entirely concocted and fabricated. 15. It would also be apposite to mention that all the parties herein are situated in Subzi Mandi, Azadpur, Delhi and it is well known that in Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 the normal course of business, traders do not normally exchange elaborate documentation. 16. It is also not the case of the Appellants that they have been conducting their business by maintaining documentation of the type, nature or manner that they allege has not been produced by the Appellant No. 2, namely, invoices and bills. In fact, there is neither any averment in this regard nor any proforma bill or invoice which they may have raised upon any person who has transacted with them. This leads us to conclude that the promissory notes, which speak for themselves are fairly evidencing the admitted liability of Appellants, and the defence sought to be taken by the Appellants is nothing but a sham, purely moonshine, concocted and fabricated. 17. The law in this regard has been succinctly laid down by the Hon’ble Supreme Court in Mechelec Engineers & Manufacturers v. Basic Equipment Corporation : (1976) 4 SCC 687 which has been followed in further judgments of the Hon’ble Supreme Court including the Judgment in IDBI Trusteeship Services Ltd. vs. Hubtown Ltd. : (2017) 1 SCC 568. 18. The principles as laid down in Mechelec Engineers & Manufacturers (supra) are as follows: “8. In Kiranmoyee Dassi Smt v. Dr J. Chatterjee [AIR 1949 Cal 479 : 49 CWN 246, 253 : ILR (1945) 2 Cal 145.] Das, J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by Order 17 CPC in the form of the following propositions (at p. 253): “(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 Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022 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 be 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.”

19. We are of the view that the present appeals fall squarely within para 8(d) of Mechelec Engineers & Manufacturers (supra). 20. In view of the foregoing discussion, and considering that the issues raised in both appeals are devoid of merit, this Court does not find any ground to interfere with the Judgments and Decrees passed by the learned Trial Court. Accordingly, the present appeals are dismissed. SUBRAMONIUM PRASAD, J. JULY 17, 2025/rk/va HARISH VAIDYANATHAN SHANKAR, J. Signature Not Verified Digitally Signed By:HARVINDER KAUR BHATIA Signing Date:05.08.2025 19:24:57 RFA(COMM) 98/2022 & RFA(COMM) 99/2022