Sh. Raj Kumar vs Sh. Harjit Singh

Manmohan Singh, J.—By this order I propose to decide the I.A No. 12001/2007 filed by the defendant under the provisions of Order 37 Rule 3[5] of the CPC thereby seeking leave to defend the suit filed by the plaintiff.

The brief facts of the matter are that M/s Charanji Lal Constructions, of which the plaintiff is the proprietor, is engaged in the business of engineers and contractors and M/s Johit Builders, of which the defendant is the proprietor, is engaged in the business of construction of buildings.

The defendant approached the plaintiff around September-October 1999 for getting the construction and development work of additional floors done at a commercial complex at 301/2, Delhi Road, Gurgaon, Haryana.

After due deliberation and negotiations, the work for the construction of above project was awarded to the plaintiff vide communication dated 25.10.1999 and 18.12.1999 on the terms and conditions mutually agreed upon between the parties and the plaintiff started the said project work. Both the parties were required to fulfil their respective obligations as per the terms of the Agreement.

It is mentioned in the plaint that initially, only civil work was assigned to the plaintiff and other electrical/sanitary and fire fighting work was to be assigned by the defendant to other agencies but as the defendant failed to decide upon such agencies, it requested the plaintiff to take up the said electrical and sanitary work also.

From 04.1.2000 the plaintiff started raising bills on the defendant but on account of non-release of funds by the defendant and for want of requisite clarification with regard to stability of structural design and defaults for the upper floors from the Architects, the said work had to be temporarily closed down in February 2000. Consequently, the labour deployed for execution of the work remained idle during this period causing financial stress on the plaintiff. A communication dated 18.1.2000 was also sent by the plaintiff to the defendant apprising him of the state of affairs.

The plaintiff submits that around May 2002 the defendant requested the plaintiff to restart the work and also to carry out demolitions of certain areas and to close certain walls in the basement as the same were required for obtaining clearance from HUDA.

Thereafter, the plaintiff again raised bills on the defendant, the details of which have been mentioned in para-10 of the plaint but the defendant failed to release the payments due to the plaintiff in spite of the assurance given by the defendant.

The plaintiff, therefore, sent several communications/reminders at regular intervals demanding the payment of his dues and on receipt of one such communication dated 17.5.2004, the defendant issued a cheque of the sum of Rs. 25,00,000/- towards partial discharge of his aforesaid liability with further assurance that the remaining dues would be paid within 15 days. The said cheque issued by the defendant was dishonoured on presentation and returned to the plaintiff with the remarks "refer to drawer".

As per plaint, after serving the defendant with a statutory legal notice the plaintiff initiated criminal proceedings under the Negotiable Instruments Act, which proceedings are pending in the Court of M.M., New Delhi.

Thereafter the plaintiff again sent a communication dated 01.03.2005 demanding a sum of Rs. 50,19,490/- which the defendant again failed to pay.

The plaintiff averred that in accordance with the arbitration clause between the parties, it sent a notice for appointment of an Arbitrator as per law but the defendant again failed to act on the same and therefore, the plaintiff filed an Arbitration Petition bearing Arb.P. No. 88/2006 in which petition this Court on 25.07.2006 passed an order in terms of which the plaintiff has filed the present recovery suit against the defendant to the tune of Rs. 25,00,000/-.

It is alleged that the plaintiff even sent a legal notice dated 18.6.2007 asking the defendant to make the payment of the aforesaid cheque, which notice stands duly served on the defendant, but the defendant has not come forward to pay the said cheque amount despite service of the said notice and hence, the present suit for recovery of Rs. 25,00,000/- has been filed by the plaintiff.

The present application has been filed by the defendant seeking leave of this Court to defend the suit filed by the plaintiff. The grounds to defend the suit have been mentioned in the affidavit filed along with this application. The main defences/grounds taken by the defendant are that:

a] the plaintiff has already received full and final amount in 2000 and no balance was left towards the defendant or against the owners of the property/site where the plaintiff had done constructions work.

b] the suit is hopeless barred by time as per the averments made in para-23 of the plaint itself wherein the plaintiff has alleged that the cause of action firstly arose on 25.10.1999 when the agreement for construction of additional floor was executed between the parties and further arose when the cheque of Rs. 25 lac was handed over to the plaintiff on 13.07.2004. The defendant submits that it issued a blank undated signed cheque to the plaintiff as security for the construction work.

c] the annexures No. 1, 2 and 3 submitted by the plaintiff along with the plaint, i.e. communications by defendant dated 25.10.1999 and 18.12.1999, communication by plaintiff dated 18.01.2000 and copies of five bills raised by the plaintiff with the details of the payments received respectively do not concern the defendant as it has signed none of these bills or communications. In view of this submission, the said annexures cannot be termed agreements. Further, even if they are termed so, as per clause No. 4 of communication dated 25.10.1999 the plaintiff was to complete the work on or before 17.02.2000. The factum of three bills raised by the plaintiff after this stipulated period (admitted in para-10 of the plaint) was due to his own wrongdoing and hence he should not be allowed to take advantage of the same.

d] the plaintiff''s submissions are contradictory as in para-4 of the plaint he asserts that the letters dated 25.10.1999 and 18.12.1999 are communications whereas in para-5 thereof he claims them to be agreements.

e] since the last running bill on 28.06.2002 was for an amount of Rs. 21,18,354/-, it is inconceivable as to how the plaintiff received the cheque of Rs. 25 lac on which the present suit is based. Further, in the plaintiff''s letter dated 17.05.2004 wherein the balance to be paid by the defendant is stated to be Rs. 46,54,690/-, the plaintiff has himself asserted that the defendant''s payment has been due for more than four years.

f] the plaintiff has intentionally raised the last three payments in bill dated 28.06.2002 as by doing so he is attempting to extend the period of limitation as regards the present suit. However, in order to come within the purview of Section 19 of the Limitation Act, 1963 the plaintiff has also to show that payment of a part of the bill was received under the hand writing of the payer. In this case, such hand writing/endorsement has only been shown by the plaintiff on their own bills and therefore, their authenticity in view of Section 19 is suspect.

g] the plaintiff has filed the present suit after expiration of the limitation period and has not shown any ground for exemption and hence the plaintiff''s suit must be barred under Order VII Rule 6 CPC.

The defendant states that it has submitted numerous triable issues which cannot be decided without leading evidences of the parties and therefore, he should be allowed unconditional leave of this Court to defend the present suit.

The plaintiff in its reply to this application of the defendant submits, among other things, that keeping in view that the defendant has admitted issuing the cheque of Rs. 25 lac, no leave should be granted to him until and unless the amount admitted to be due is deposited by him in this Court.

On a bare perusal of the defendant''s application, I find that there is no admission as regards issuance of the said cheque of Rs. 25 lac. On the contrary, the defendant has stated that the plaintiff has received full and final payment in 2002 and nothing further is due. Therefore, as regards the last alleged running bill on 28.06.2002 for an amount of Rs. 21,18,354/- and it is inconceivable as to how the plaintiff received the cheque of Rs. 25 lac on which the present suit is based and in fact there was an undated cheque which was given to the plaintiff by the defendant as security for the construction work.

Therefore prima facie the statements of the defendant in the affidavit do inspire much confidence, at least at the present stage of proceedings. Hence, this Court feels the matter requires trial as per defence raised by the defendant.

In Defiance Knitting Industries Pvt. Ltd. Vs. Jay Arts, the Hon''ble Apex Court referred to its judgment in Mechelec Engineers and Manufacturers Vs. Basic Equipment Corporation, wherein it laid down several principles which ought to be followed by a court while granting/declining leave to defend under Order 37 Rule 3. These principles are as follows:

(a) If the court is of the opinion that the case raises a triable issue then leave to defend should ordinarily be granted unconditionally. The question whether the defence raises a triable issue or not has to be ascertained by the court from the pleadings before it and the affidavits of parties.

(b) If 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 or vexatious it may refuse leave to defend altogether.

(c) In cases where the court entertains a genuine doubt on the question as to whether the defence is genuine or sham or whether it raises a triable issue or not, the court may impose conditions in granting leave to defend.

In AIR 1990 2218 (SC) it was held as follows:

Leave is declined where the court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defences. The test is to see whether the defence raises a real issue and not a sham one, in the sense that if the facts alleged by the defendant are established there would be a good or even a plausible defence on those facts. If the court is satisfied about that leave must be given. If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based or uncertainty as to the amount actually due or where the alleged facts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross-examine his witnesses leave should not be denied. Where also, the defendant shows that even on a fair probability he has a bona fide defence, he ought to have leave. Summary judgments under Order 37 should not be granted where serious conflict as to matter of fact or where any difficulty on issues as to law arises. The court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency.

The other aspect of the matter is that the plaintiff filed a criminal complaint against the defendant on the basis of the alleged dishonour of the cheque of Rs. 25 lac u/s 138 of Negotiable Instruments Act as CC No. 184/1 in the court of Ms. Geetanjali Goel, MM, New Delhi and that the said complaint has been dismissed after recording of evidence and decided on merit.

In the said criminal proceedings, it was held that "in the instant case there is nothing to show that the liability was an admitted one or same was acknowledges such that it would come within the period of limitation." It was further held as follows:

It is thus seen that though the notice must be presumed to have been served on the accused the complainant has otherwise failed to prove that the cheque was issued in discharge of legally enforceable debt or other liability. In view of the above discussion the complainant has failed to prove his case against the accused beyond reasonable doubt. Accordingly the complaint for the offence u/s 138 Negotiable Instruments Act filed by the complainant is dismissed.

Learned Counsel for the plaintiff has contended that the above-mentioned finding does not apply to the present proceedings as the findings of a criminal court do not apply on related civil proceedings. Further, it is argued that an appeal against the order is pending. Learned Counsel has referred to decisions in two cases, inter alia, Krishan Murari Gupta Vs. Hemant Kumar Sethi, and M/s Ganga Roller Flour Mills Pvt. Ltd. Vs. M/s A.B. Industries (Baba Bread), . Both these judgments do not support the contention of the plaintiff as the former pertains to a case where proceedings in the criminal court were pending but in the present case, the proceedings in the criminal court were concluded and determined and the plaintiff''s complaint had been dismissed after recording of the evidence of the parties and in the latter, the facts and circumstances are completely different from the present ones.

Without getting into the dispute as to whether or not the findings given in the criminal complaint are binding in these proceedings, while examining the question of granting leave to the defendant, this Court is of the opinion that as per the defenses raised by the defendant, this Court considers that the defendant is entitled to the grant of leave to defend.

In view of the afore-mentioned principles and the facts and circumstances of the case, as well as the defendant''s affidavit, I am of the view that the defense raised by the defendant is a triable issue and therefore the defendant is entitled to grant of leave to defend in the present case without any condition.

The defendant is granted four weeks time to file the written statement with an advance copy of the same to the plaintiff who may file a replication, if any, within four weeks thereafter.

List this matter before the Joint Registrar on 22nd September, 2009 for admission/denial of documents and before the court on 15th October, 2009 for framing of issues.

The I.A is disposed of accordingly.