MA Kreeng Construction Pvt. Ltd. vs Dipak Saha <BR> Dipak Saha Vs MA Kreeng Construction Pvt. Ltd.

Dr. Ashim Kumar Banerjee, J.—Parties entered into an agreement for sale dated May 25, 2006 by which the appellants agreed to sell and the respondents agreed to purchase an office space in premises No. 118, Raja Dinendra Street, Calcutta. As per the agreement, the respondents paid Rs. 68 lakhs. The appellants would, however, deny receipt of the entire sum. According to them, only a sum of Rs. 17 lakhs was paid by cheque whereas the balance sum of Rs. 51 lakhs alleged to have been paid in cash was not received. There was no contemporaneous demand, neither the respondents got possession of the office space nor the Conveyance was executed. Fact would remain, the self-same office premises was leased out to Bajaj Alliance Life Insurance Company Ltd. Bajaj duly fixed their hoarding and they were in possession since then. The respondents never objected. According to the respondents, in 2009 the parties entered into an agreement for refund of the said sum of Rs. 68 lakhs and in fact, a sum of Rs. 10 lakhs was paid by cheque. The balance sum was to be paid by post dated cheques handed over to the respondents, simultaneously with the execution of the agreement for refund. The appellants would, however, contend, the respondents being accompanied by hooligans and/or anti-socials raided their office and coerced to sign the so-called agreement to refund and post dated cheques. They immediately made a complaint to the police station followed by reminder and ultimately an application u/s 156(3) of the Criminal Procedure Code was made before the learned Magistrate. The learned Magistrate declined to ask the police to intervene, as according to him, the dispute was civil in nature. He, however, directed hearing of the said application upon notice to the other side. The appellants approached one of us (Banerjee, J.) in an application for Criminal Revision where the Criminal Revisional Court observed, the observation of the learned Magistrate was prima facie in nature and must not influence the ultimate finding. Learned Magistrate, upon hearing, ultimately directed registration of FIR. The respondents became aggrieved. They filed a revisional application before this Court for quashing of the FIR. Learned Single Judge declined. The criminal proceeding is thus pending and awaiting final decision.

The respondents filed the above suit inter alia by making a money claim on the strength of the agreement to refund. Needless to say, the post dated cheques were not honoured by the bank. The respondents not only claimed refund of Rs. 68 lakhs being the principal sum but also compensation of Rs. 42 lakhs as per the so-called agreement to refund. A sum of Rs. 1.1 crore was claimed together with interest at the rate of 21% per annum. The respondents also made an application for summary judgment. Learned Single Judge vide judgment and order dated April 4, 2011 allowed the application in part and asked the appellants to put in Rs. 68 lakhs together with interest at the rate of 12% per annum on and from May 25, 2006 till the date of deposit as a condition precedent to defend the suit. Being aggrieved, both parties preferred the respective appeals. The appellants were aggrieved as His Lordship did not grant unconditional leave. The respondents were aggrieved as His Lordship did not pass a decree for the entire sum.

We heard the learned Counsel appearing for the parties.

Ms. Chhama Mukherjee, learned Counsel appearing for the appellants would contend, the agreement for sale, even if taken on its face value, would be clearly barred by the laws of limitation. No suit for specific performance was ever filed by the respondents. The respondents also did not contemporaneously claim refund of the sum. The suit being filed after three years, would be clearly barred by the laws of limitation.

On merits, Ms. Mukherjee would contend, the parties had innumerable transactions for a long span of time. Initially the agreement for sale was entered into, that did not materialise. Subsequently, the respondents purchased other properties from the appellants. The parties had several dealings. Hence the present controversy could not be considered in isolation. According to Ms. Mukherjee, the agreement for sale being barred by the laws of limitation would not be liable to be enforced beyond the said period. Hence question of refund would not arise at all. The agreement to refund was obtained by fraud and/or coercion. The criminal case was pending for quite some time. Unless such criminal case would draw a logical conclusion, the present claim would not be tenable. She would also contend, subsequently the plaintiff-respondent also purchased the premises No. 120, Raja Dinendra Street, Kolkata upon payment of due consideration. The respondents never claimed refund of the alleged sum of Rs. 68 lakhs or adjustment thereof either in respect of premises No. 120, Raja Dinendra Street or Uluberia property. According to her, when the document itself was under challenge that would raise a triable issue and the defendants in the suit being the appellants, would be entitled to unconditional leave to defend. Explaining the refund of the sum of Rs. 17 lakhs in two instalments of Rs. 8.5 lakhs each. Mrs. Mukherjee would contend, such payment had no nexus with the present controversy. The appellants were paid the said sum, rather the respondents persuaded the appellants to accept the said sum that was subsequently refunded. Mrs. Mukherjee relied on the following decisions:

i) Santosh Kumar Vs. Bhai Mool Singh,

ii Mechelec Engineers and Manufacturers Vs. Basic Equipment Corporation,

iii) Jashbhai Motibhai Patel Vs. Hasmukhbhai Ravjibhai Patel, and

iv) State Bank of Saurashtra Vs. Ashit Shipping Services (P.) Ltd. and Another,

Per contra, Mr. M.S. Tewari, learned Counsel appearing for the respondents would contend, the proposition of law so advanced by Ms. Mukherjee would require no elaboration. Those were well-settled principle of law on the subject. Question would still remain, whether the defence so advanced by the appellants was bona fide or not. Mr. Tewari would draw our attention to the pleadings to show, specific, assertion by the respondents that the memo of consideration had been written by Suresh Pande in his own handwriting, was not dealt with by the appellants in their affidavit-in-opposition that would presuppose, the defendants did not have any defence.

Mr. Abhrajit Mitra, learned Counsel also appearing for the respondents would contend, the criminal case would not stand in the way of a summary judgment as prayed for before His Lordship. The defence so advanced by the appellants would constitute no plausible defence that could resist an inevitable decree for the sum claimed. The learned Judge possibly overlooked the same and allowed the said application in part. Mr. Mitra would lastly contend, in case this Court would be inclined to grant leave to defend, adequate security must be provided.

While giving reply, Ms. Mukherjee referred to the prayers of the plaint to show, it was not a suit for specific performance of the agreement for sale in relation to an immovable property that would be barred by laws of limitation. The suit was based upon an agreement to refund that was squarely the subject matter of the criminal proceeding. This would definitely raise a triable issue.

After the hearing was concluded and judgment was kept reserved, the appellants filed an affidavit through the defendant No. 2 being a Director of the appellant No. 1 and the husband of the appellant No. 3. Paragraph 4 and 9 being relevant herein are quoted below:-

That the Directors Suresh Pandey and Manju Pandey, wife of Suresh Pandey are joint owners of a flat being No. B-306, Shanti Niketan Apartments, 32/4, Sahitya Parishad Street, Kolkata-700006.

It is stated and submitted as a gesture of his goodwill and undoubted faith in the judicial administration of this country the Appellants shall, if directed, by this Hon''ble Court undertake not to part/transfer ownership of his flat comprising 1660 square feet area situated at B-306, Shanti Niketan Apartments, 32/4, Sahitya Parishad A Street, Kolkata-700006 valued at Rs. 1.5 crore approx. as on date, without the leave of the Hon''ble Court, during the pendency of the suit C.S. 35 of 2010.

The decisions cited at the Bar would consistently propagate the well-settled principle of law as to what would be the right approach of the Court in a controversy of the like nature. However, the principle of law as decided, would originate from an age old decision of this Court in the case of Sm. Kiranmoyee Dassi and another Vs. Dr. J. Chatterjee where the learned Single Judge set down the principle explaining the circumstance under which an application for leave to defend should be considered and, if so, conditionally or unconditionally the guidelines are as follows:

(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 made it clear that he had 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 plaintiffs 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.

Such principle was once again reiterated by the Apex Court in the case of Mechalec Engineering (Supra). The said principle is still holding the field and considered to be the guideline to be followed. Applying such ratio in the present context, we would feel, the defendants should get an opportunity to defend the suit particularly when they could establish their worth through the affidavit referred to above. Significant to note, by the said affidavit the defendant No. 2 and 3 being the Directors of the defendant No. 1 undertook not to dispose of their flat worth about Rs. 1.5 crores in their estimation, in addition to the cash security already furnished by the appellants to the extent of Rs. 27 lacs in terms of the order dated April 18, 2011.

Bringing the facts in a narrow campus we would find an arguable case being met out by the appellants. If we consider the agreement for sale, we would find the same clearly barred by the laws of limitation. The plaintiff would save the limitation relying on the agreement to refund that was subject matter of a criminal proceeding that is still awaiting decision by the competent criminal Court. Learned Judge expressed doubt about the criminal complaint being made to the police station on May 19, 2009 however, such doubt, in our view, is misplaced as the Court already took cognizance and the FIR had since been registered on the basis of the complaint. Pertinent to note, the complaint had been made before the appellants received the notice of demand issued u/s 138 of the Negotiable Instruments Act alleging dishonour of cheques that were sought to be handed over simultaneously on execution of the disputed agreement.

The appeal Nos. 172 & 173 thus succeed and are allowed. The judgment and order impugned herein is set aside. The appellants would be entitled to defend the suit by filing written statement within a period of four weeks from date. The parties would at liberty to disclose documents, if any left, within two weeks thereafter. The parties would at liberty to apply for an early date of hearing of the suit before the learned Single Judge after the suit is made ready for hearing.

We hope and trust the appellants being the defendants in the suit would preserve the property offered as security as referred to above being flat comprising of 1660 square feet in premises No. B-306, Shanti Niketan Apartments, 32/4, Sahitya Parishad Street, Kolkata till the suit is heard and disposed of.

The appeals are disposed of accordingly without any order as to costs. Urgent certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.

Mrinal Kanti Chaudhuri, J.

I agree.