Neeraj Kumar vs Daryao Singh Khatri

Valmiki J Mehta, J.—The challenge by means of this Regular First Appeal (RFA) filed u/s 96 of Code of Civil Procedure, 1908 (CPC) is to the impugned judgment of the trial Court dated 19.5.2003 decreeing the suit filed by the respondent/plaintiff under Order 37 CPC for a sum of Rs. 3 lakhs with interest @ 24% per annum pendente lite and future.

The suit has been decreed inasmuch as it was held that the application for leave to defend was not filed within the prescribed period of limitation after service of summons for judgment, though, an application for leave to defend, existed on record much earlier even to service of summons for judgment.

The brief facts of the case are that respondent/plaintiff filed a suit for recovery of Rs. 3 lakhs with interest @ 24% per annum from 2.7.2000 relying upon a promissory note, claimed to have been executed by the appellant/defendant. The payment of the amount under the promissory note is admittedly in cash and there is no proof except promissory note of the loan being for Rs. 3 lakhs and interest payable @ 24% per annum.

The trial Court refers to the fact that service of the summons for judgment in the suit was on 6.3.2003 and, therefore, the application for leave to defend should have been filed thereafter within ten days. The appellant/defendant had already filed the application for leave to defend which was on the record of the trial Court even before service of the summons for judgment on 6.3.2003. This application for leave to defend is dated 13.1.2003 which was admittedly on record.

In my opinion, the trial Court has unnecessarily taken a hyper-technical approach. No doubt, a leave to defend application has to be filed within ten days from the service of summons for judgment, however, the same cannot mean that the defendant, who acting in caution filed an application for leave to defend earlier, such earlier application cannot be looked into by the Court. Obviously, an application filed after ten days cannot be looked into, but it cannot be the law that the application filed even before service of summons for judgment cannot be taken as an application for leave to defend. The only logic of requiring an application for leave to defend to be filed within ten days is not to delay the proceedings under Order 37 CPC in the suit, a foundation of which provision is reasonable expedition in the disposal of the suit. That object of avoiding delay in fact is not frustrated by a leave to defend application which is filed earlier/prior to the service of the summons for judgment in the suit.

Learned counsel for the appellant has argued that the appellant has a very strong case on merits, inasmuch as, the loan was only for Rs. 75,000/- and which amount was returned, because the three cheques giving security of the amount of Rs. 75,000/- have been returned to the appellant/defendant, however, the respondent/plaintiff failed to return the promissory note which was taken in blank because the interest was not paid.

It is also argued that the rate of interest of 24% is exorbitant and illegal in view of a Division Bench judgment in the case titled as Pandit Munshi Ram Associates v. D.D.A, 2010 (9) AD (Del) 313, which held that even the pre-suit rate of interest, if highly excessive, is against public policy.

Learned counsel for the appellant states that his client to show bona fides is ready to deposit a total of Rs. 3 lakhs in the Court. Out of this principal amount, an amount of Rs. 1,98,000/- has already been deposited in this Court pursuant to orders passed in this appeal. The balance amount of Rs. 1,02,000/- is agreed to be deposited by the appellant in this Court within a period of six weeks from today. The amount already deposited and the amount which is now to be deposited by the appellant will abide the orders which would be passed by the trial Court in the application for leave to defend or as per the final judgment in the case, as the case may be. The Registry will put the amount of Rs. 1,02,000/- which will be deposited by the appellant, in a fixed deposit so as to earn maximum rate of interest.

The present appeal is allowed. The impugned judgment dated 19.5.2003 is set aside. The trial Court will now hear and dispose of the application for leave to defend dated 13.1.2003 filed by the appellant/defendant in accordance with law. Parties are left to bear their own costs. Trial Court record be sent back.

Appellant to appear before the District and Sessions Judge, Delhi on 29th February, 2012, and on which date the District and Sessions Judge will mark the suit for disposal to a competent Court in accordance with law. It is clarified that the trial Court will issue notice to the respondent/plaintiff before proceeding to hear and dispose of the leave to defend application dated 13.1.2003 filed by the appellant/defendant.