High Court · 2019

Procedure Code against the defendant appellant herein for recovery of an amount of Rs 12,00,000/- along with interest at a rate of 18% on the premise that the plaintiff respondent herein had paid the amount in question to the defendant appellant herein as an advance for the purpose of purchasing of a plot of land in the month of March RFA 13 of 2023 2017 in which the defendant appellant herein failed, as a consequence whereof upon making a demand for return of the said advance amount, the defendant appellant herein issued four cheques amounting to Rs 12,00,000/- drawn in the name of J&K Bank, Batamaloo, Srinagar favouring the plaintiff-respondent herein, and that the said cheques had been issued by the defendant-appellant with the condition and assurance that the same shall not be presented for encashment by the plaintiff-respondent herein as the amount covered by the cheques will be paid in cash by the defendant-appellant herein to the plaintiff-respondent herein, and upon failure of the defendant- appellant herein to pay the said amount of Rs.12,00,000/-, the plaintiff-respondent herein instituted the suit in question.

3. After entertaining the suit supra and upon entering appearance thereof, the defendant-appellant herein filed an application before the trial court for seeking leave to defend the suit, in which application while denying any transaction of him with the plaintiff-respondent herein pertaining to the purchase of a plot of land, yet it came to be stated therein the application that the plaintiff-respondent herein had some dealings with one Mohammad Hanief on whose asking the defendant-appellant issued the cheques in question to the plaintiff- respondent herein, however, without filling in the amount and the date in the said cheques, as the said cheques were issued by way of security, stating further therein the said application that an amount of Rs. 5.99 lacs in fact out of the claim outstanding amount of Rs. 12,00,000/- had been paid by the defendant-appellant herein to the RFA 13 of 2023 plaintiff-respondent herein, through bank transfer, cheque as well as cash.

4. The trial court, upon considering the said application, after inviting objections from the plaintiff-respondent herein in terms of order dated 25th February 2019, allowed the same, however, with the condition that the defendant-appellant herein shall deposit an amount of Rs. 6.00 lacs before the court, or in the alternative furnish a cash security of Rs. 6.00 lacs in the shape of bank guarantee before the court within 30 days’ time.

5. After passing of the order of grant of conditional leave supra dated 25th February 2019, the defendant appellant herein, instead of complying with it, challenged the same before this court in OWP 467 of 2019, which petition came to be dismissed on 10th May 2019, upholding the order under challenge dated 25th February 2019 whereafter the defendant appellant herein after dismissal of OWP 467 of 2019 supra did not appear before the trial court, consequent to which the trial court passed the impugned judgment and decree holding the plaintiff respondent herein entitled to the decree of recovery of Rs.12.00 lacs along with interest at a rate of 18% with cost of proceeding until its realization recoverable from the defendant appellant herein.

6. Feeling aggrieved of the impugned judgment and decree judgment dated 17th July 2019, the defendant appellant herein has maintained the instant appeal on multiple grounds urged in the appeal. Heard learned counsel for the parties and perused of the record. RFA 13 of 2023

7. According to Mr. M. Sultan, appearing counsel for the defendant appellant herein, the trial court ought not to have passed the impugned judgment and decree in favour of the plaintiff respondent herein, for the entire amount of Rs. 12.00 lacs, in that, the defendant, appellant had paid approximately an amount of Rs. 6,00 lacs to the plaintiff respondent herein prior to the institution of the suit, details of which payments were detailed out in the application seeking leave to defend, filed by the defendant appellant herein before the trial court and of which fact the trial court had taken cognizance while passing the order of grant of leave dated 25th February 2019, while recording a finding that the plaintiff respondent herein has admitted to have received Rs. 5.99 lacs from the defendant appellant herein leaving the outstanding recoverable amount to the tune of Rs. 6.00 lacs only.

8. On the contrary, the counsel for the plaintiff respondent herein would submit that since the suit was not contested by the defendant appellant herein before the trial court despite grant of leave to defend, the counsel for the defendant appellant herein cannot thus set up a defence that part payment out of recoverable amount stand paid to the plaintiff respondent herein before this court in the instant appeal.

9. Before proceeding to deal with the afforced rival submissions of the appearing counsel for the parties, a reference to relevant provisions of Order 37 Rule 3(5) of the Civil Procedure Court becomes imperative hereunder: RFA 13 of 2023 ORDER XXXVII SUMMARY PROCEDURE [3. Procedure for the appearance of defendant— (5) The defendant may, 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, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just: Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous vexatious: Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.

10. Under Order 37, Rule 3 (5) supra, a discretionary power has been conferred upon a court to grant leave to a defendant to defend the suit, which leave may be granted by the court unconditionally or conditionally upon such terms as may appear to be just and proper. The Apex Court in case titled as “Milkhiram (India) (P) Ltd. V. Chamanlal Bros, reported in 1965 SC 1698”, has held that while exercising discretion under Order 37(3) a court has to form its own tentative conclusion about the quality or nature of the defence and determine the conditions upon which leave to defend may be granted and if the court is of the opinion that the case raises a triable issue then the leave shall be granted ordinarily unconditionally. The Apex Court in case titled as “Mechelec Engineers and Manufacturers v. RFA 13 of 2023 Basic Equipment Corporation reported in (1976) 4 SCC 687” has held that the power entrusted upon a court under Order 37(5) has to be exercised reasonably and on sound judicial principles being a discretionary power vested in a court. The Apex Court at para 8 of the judgment supra has laid down the following: “8. In Smt. Kiranmoyee Dassi & Anr. v. Dr. J. Chatterjee, Das. J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by order 17 C.P.C. in the form of the following propositions: "(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 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 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 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 Plain- tiff 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 se- cured 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". Thus, what emanates from the above principles laid down by the Apex court in the judgments supra, is that it is only in cases which fall in clause (e) that an imposition of condition to deposit an amount in the court before proceeding further is RFA 13 of 2023 justifiable, which clause provides that 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".

11. Keeping in mind the aforesaid provisions and principles of law and reverting back to the case in hand, it is not in dispute that the trial court granted conditional leave to the defendant appellant herein requiring him to deposit an amount of Rs.6.00 lacs in the court or alternatively deposit the same by way of a bank guarantee or demand draft, while in explicit terms observing that the defence set up by the defendant appellant herein seems to be illusory and sham. Although the trial court in the said order of grant of leave also observed that the plaintiff respondent herein has admitted to have received an amount of Rs. 5.99 lacs and that the rest of the amount of Rs. 6.00 lacs is payable by the defendant appellant herein to the plaintiff respondent herein, yet perusal of the objection filed by the plaintiff respondent herein to the application seeking leave to defend filed by the defendant appellant herein does not reveal such position whereby it could be said that the plaintiff respondent herein has admitted to have received Rs. 5.99 lacs from the defendant appellant herein. The observation made by the trial court in this regard in the order of grant of leave is found to be factually RFA 13 of 2023 incorrect. Even otherwise, such an observation can safely be said to have been recorded tentatively while exercising a discretionary power and cannot be said to be a definite finding recorded in the suit. The counsel for the defendant appellant herein thus under circumstances cannot seek or derive any support on the basis of said observation made by the trial court in the order of grant of leave that too while questioning the impugned judgment and decree having been passed finally on account of failure of the defendant appellant herein to adhere to the terms of the conditional leave. The defendant appellant herein having abandoned the proceeding in the main suit and also failed to prove the defence set up by him on the basis of which the defendant appellant herein had been granted conditional leave by the trial court, the defendant appellant herein cannot be permitted to fall back upon an observation of the trial court made in the discretionary order of grant of leave.

12. The trial court, thus, under these circumstances, cannot be said to have faulted in the matter of passing of the impugned judgment and decree for not having taken into account the aforesaid plea that the plaintiff has admitted to have received Rs. 5.99 lacs out of the claimed amount of Rs.12.00 lacs It is significant to note here that in terms of clause (b) of Sub Rule 6 of Rule 3 of Order 37 the defendant is permitted to defend the suit and in case the defendant fails to comply with the order, the plaintiff in law becomes entitled to a decree in his favour forthwith. The said position has been laid down by the Apex court in case titled as RFA 13 of 2023 “Neebha Kapoor vs. Jayantilal Khandwala and others reported in (2008) 3 SCC 770”. It is also relevant to mention here that Order 37 CPC has been enacted with an underlying object of public policy for disposal of suits as expeditiously as possible and prescribing timeframe therefor.

13. Furthermore, it would be unwise for this court to return any finding qua the order of grant of leave passed by the trial court in favour of the defendant appellant herein, in that, the validity of the said order as noticed in the preceding paras stands already tested by this court in earlier round of litigation instituted by the defendant appellant herein while filing OWP 467 of 2019. Risking repetition, it is reiterated that the said order of grant of leave passed by the trial court in favour of the defendant appellant herein has been passed during the course of the proceedings before the trial court and any observations made or any finding recorded therein the said order cannot by any stretch of imagination said to be a decision rendered by the trial court on the merits of the case.

14. Viewed thus, what has been observed, considered and analysed hereinabove, the appeal fails and is accordingly dismissed. (JAVED IQBAL WANI) JUDGE Whether the order is speaking: Yes Whether the order is reportable: Yes Srinagar 08-10-2024 N Ahmad Nissar Ahmad Bhat I attest to the accuracy and authenticity of this document

17.10.2024 14:47