Sh. Rinku Aggarwal vs Smt. Kanta Kumari

A.K. Pathak, J.—Plaintiff has filed this suit under Order 37 of the Code of Civil Procedure, 1908 ("CPC", for short) against the defendant for recovery of Rs. 21 lacs together with future interest @ 18% per annum and costs. After service of summons under Order 37 CPC, defendant entered appearance within the prescribed period. Thereafter, summons for judgment were issued. Upon service of summons, defendant has filed this application under Order 37 Rule 3(5) CPC, seeking "leave to defend" the suit.

Perusal of record shows that the defendant has been avoiding seeking "leave to defend" the suit. the to argue the matter for quite some time. On 29August, 2011 matter had to be adjourned as counsel for the defendant was stated th to be down with viral fever. On 27February, 2012 also adjournment was sought on the ground that counsel was unwell. Again on 7March, 2012 adjournment was taken by the defendant on the ground of illness of the counsel. Again on 26 March, 2012 adjournment was taken by the defendant on the ground that counsel was busy in Supreme Court. It was made clear in the order dated 26March, 2012 that in case matter is not argued by the defendant, appropriate orders would be passed. Today counsel for the defendant submits that he would be seeking discharge from the brief. I am convinced that defendant is only interested in dragging on the matter. Adjournment is declined I proceed to dispose of the matter after hearing counsel for the plaintiff and perusing the record.

Case of the plaintiff is that vide an Agreement to Sell dated 25March, 2006 (hereinafter referred to as "Agreement") defendant had agreed to sell a plot of land bearing No. C-7, Sector Swarn Nagri, Greater Noida, Gautam Budh Nagar (hereinafter referred to as "suit property") to the plaintiff for a total sale consideration of Rs. 67,68,000/-(Rupees Sixty Seven Lacs and Sixty Eight Thousand Only). Rs. 15,00,000/-(Rupees Fifteen Lacs Only) was paid by the plaintiff to defendant towards advance money. Rs. 10,00,000/-(Rupees Ten Lacs Only) was paid in cash; whereas Rs. 5,00,000/-(Rupees Five Lacs Only) was paid through a cheque bearing no. 099541 drawn on Urban Co-operative Bank, Suraj Pur, Greater Noida. Balance sale consideration of Rs. 52,68,000/-(Rupees Fifty Two Lacs Sixty Eight Thousand Only) was agreed to be paid on or before 4May, 2006. Plaintiff arranged this amount, and approached the defendant on 2May, 2006 and requested her to execute the documents. Defendant represented that she wanted to alter the terms of agreement as she wanted higher price for the suit property, inasmuch as, she misbehaved with the plaintiff. Plaintiff filed a complaint with Police Station Seema Puri in this regard. On the 4May, 2006 defendant called the plaintiff at her residence and requested him to grant some more time to her for completing the transaction. On 9May, 2006 plaintiff again approached the defendant with remaining amount of Rs. 52,68,000/-(Rupees Fifty Two Lacs and Sixty Eight Thousand Only) but defendant showed her reluctance. She requested plaintiff to wait till 15May, 2006 and thereafter upto 19May, 2006. On 19May, 2006 plaintiff finally asked the defendant to make up her mind as to whether she was willing to sell the suit property or not and requested her to fix a date for completing the formalities of sale. Defendant agreed to complete the sale transaction by 15June, 2006. She further agreed to hand over possession by 15June, 2006 failing which she undertook to pay Rs. 22 lacs, that is, Rs. 15 lacs advance plus Rs. 7 lacs as penalty to the plaintiff. An agreement to this effect was executed on 19May, 2006. Defendant failed to fulfill her promise, thus, issued four postdated cheques totaling to Rs. 22 lacs, on 15June, 2006, details whereof are as under:-

S.No.

Cheque No.

dt.

Amount

Drawn on

1

402914

19.6.2006

Rs. 100000/-

Corporation Bank, Dilshad Garden Delhi

2

402919

25.6.2006

Rs. 400000/-

-Do-

3

402920

5.7.2006

Rs. 1000000/-

-Do-

4

402910

25.7.2006

Rs. 700000/-

-Do-

First cheque was encashed on presentation. However, remaining cheques, on presentation, were returned dishonored with the remarks "Insufficient Funds".

Plaintiff served a legal notice dated 11August, 2006 on the defendant through his counsel, calling upon her to make payment within the statutory period. But defendant did not make any payment. It is stated in the plaint that no relief which does not fall within the ambit of Order 37 CPC has been claimed in the suit.

In her "leave to defend" application, defendant has not denied execution of Agreement to Sell as also receipt of earnest money. It has also not been denied that the deal was to be concluded on or before 4May, 2006. Defendant has alleged that the plaintiff has failed to pay the balance sale consideration on or before 4May, 2006. On 4May, 2006 one Mr. Ankur Mittal and Mr. Arora visited her residence and sought extension of time, inasmuch, as showed a photocopy of agreement dated 25March, 2006 signed by the defendant. Defendant agreed to extend the date of payment of balance sale consideration till 9May, 2006. The above named two persons obtained endorsement and signatures of defendant on the photocopy of agreement, to this effect. Even on 9May, 2006 balance sale consideration was not paid, instead plaintiff took extension of time till 15May, 2006. Balance sale consideration was not tendered even on 15May, 2006. At the request of plaintiff, time was further extended by the defendant till 19May, 2006. In the morning of 19May, 2006, plaintiff along with five other persons including Mr. Ankur Mittal came to the house of defendant and sought further extension of time to make payment. They represented that balance amount would positively be paid on or before 15June, 2006. However, they wanted assurance from the defendant that on tendering of balance sale consideration defendant would hand over possession of the suit property and in case, she fails to do so she would pay Rs. 7 lacs. On the basis of this understanding, a fresh agreement was executed on the stamp paper of Rs. 100/-which was signed by the defendant and plaintiff. Plaintiff along with said five persons again came to defendant? residence ,in the evening of 19May, 2006 itself and forced her to sign four postdated cheques amounting to Rs. 22 lacs by extending threats. They assured that cheques were being taken towards security so as to see that defendant hands over possession of the plot to them by 15June, 2006. Defendant was assured that cheques will not be encashed. Even on 15June, 2006 plaintiff failed to pay the balance sale consideration, thus, earnest money stood forfeited in terms of the agreement. However, plaintiff got encashed the cheque bearing No. 402914 dated 19June, 2006 for Rs. 1 lac, in the meanwhile. He also took Rs. 1 lac from the defendant in cash on 7July, 2006, on the pretext that his wife was unwell and was hospitalized. In nutshell, defence of the defendant is that plaintiff had failed to fulfill his part of obligation, as contained in Agreement to Sell and did not tender balance sale consideration, resulting in forfeiture of earnest money. Cheques were given towards security, regarding handing over of the possession of suit property, on receipt of balance sale consideration. It is further alleged that a criminal complaint being complaint case no. 503/2006 was filed by the plaintiff but has been rejected by the Additional Chief Metropolitan Magistrate-1 (East) on 27August, 2009 since the plaintiff admitted in the said case that he did not approach the defendant after 19May, 2006 for making balance payment and executing the Sale Deed. Whole case of the defendant is that the cheques in question were taken by the plaintiff from the defendant by exercising force and threat, inasmuch as, cheques were issued towards security.

Before "leave to defend" can be granted to the defendant, she has to satisfy the Court that she has a good defence to claim on merits. Defendant has to raise triable issues indicating that she has a fair or bona fide or reasonable defence though it may not be positively a good defence. In case defendant discloses triable issues by raising plausible and reasonable defence, she is entitled to leave to defend the suit conditionally or unconditionally. However, if defendant sets up an illusory or sham or vexatious defence, she would not be entitled to "leave to defend" the suit. In Mechelec Engineers and Manufacturers Vs. Basic Equipment Corporation, Supreme Court quoted with approval a decision of Calcutta High Court in Smt. Kiranmoyee Dassi v. Dr. J. Chatterjee Das, J., AIR 1949 Cal 479 in the following terms:-

(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 defense, 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 defence to the plaintiff? 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.

In Milkhiram (India) Private Ltd. and Others Vs. Chamanlal Bros., Apex Court has held that if Court is of the opinion that a case raises a triable issue, then leave to defend should ordinarily be granted unconditionally. On the other hand, if the Court is of the opinion that the defence raised is frivolous or false or sham, he should refuse leave to defend altogether. Though no strait-jacket formula can be formulated on the issue, however, Court may entertain a genuine doubt whether the defence is genuine or sham or whether, in other words it raises a triable issue or not. Such an opinion is to be formed by the Court from the pleadings and affidavit of the parties placed before it.

In the backdrop of above settled legal position, if defence of the defendant is considered in this case, same appears to be frivolous, baseless, vexatious and moonshine. Defendant has alleged that plaintiff had obtained cheques in question by threatening her. However, it is also a fact that no complaint was lodged by the defendant with the police authority that plaintiff had forcibly taken cheques worth Rs. 22 lacs from her by pressurizing and threatening her. Her this conduct is quite unnatural. No prudent person would sit idle without taking any action in such circumstances. Not only this, she did not even take any steps to inform her bankers in this regard. One cheque has even been encashed. Other cheques have been returned unpaid for the reason "Insufficient Funds" and not on the ground of "stop payment". That apart, defendant is not sure of her defence. On one hand she has alleged that the cheques had been taken by extending threats; on the other she has claimed that cheques were issued as security. Not only this, defendant claims that plaintiff had taken Rs. 1 lac in cash from her on 7July, 2006, that is, after about 2 months on the pretext that he needed money as his wife was hospitalized. Had plaintiff obtained the cheques by exercising force and relations between them were strained, defendant was not expected to pay Rs. 1 lac to the plaintiff. Accordingly, defence taken by her does not appear to be plausible, in the facts and circumstances as narrated hereinabove. Defence raised by the defendant in this case falls within clause (d) of the principles culled out in Kiranmoyee Dassi (supra), that is, if the defendant has no defence or the defence set up is an 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.

Defence set up by the defendant, in my view, is baseless, frivolous, moonshine and defendant is not entitled to leave to defend the suit. Application is, thus, dismissed.

CS(OS) No. 1912/2006

Defendant has already been refused leave to defend the suit. Thus, plaintiff is entitled to a decree of Rs. 21,00,000/-(Rupees Twenty One Lacs Only). However, rate of interest claimed appears to be on the higher side. In my view interest @ 9% would meet the ends of justice. Accordingly, a decree is passed in favour of the plaintiff against the defendant in the sum of Rs. 21,00,000/-(Rupees Twenty One Lacs Only) together with interest @ 9% per annum from the date of filing of the suit till realization of decretal amount. Plaintiff is also awarded costs of proceedings. Decree-sheet be drawn.