TRIMAX IT INFRASTRUCTURE & SERVICES LTD vs KALAKRITI INTERIORS

This is an appeal against the impugned judgment and decree dated 28th August, 2015 by which the suit of the Respondent/Plaintiff (hereinafter

''Plaintiff'') has been decreed for the principal amount of Rs.7,12,096/- along with interest @ 12% per annum.

The suit was filed under Order XXXVII of the Code of Civil Procedure, 1908 (hereinafter, ''CPC''). The Plaintiff was a sub-contractor of the

Appellant/Defendant (hereinafter ''Defendant'') for the project in the name of Himachal Pradesh State Co-operative Bank Ltd. (''HPSCBL'') at

Shimla. It is the Plaintiff?s case that he has executed the entire work which was to be undertaken without any complaint or defect whatsoever and

has also raised bills from time to time. The project was completed in 2013. Out of the total invoices raised for a sum of Rs.30,60,517/-, the

payment which was made as per the Plaintiff was Rs.23,48,421/- and there was a balance of Rs.7,12,096/-. For this sum, the Plaintiff filed a suit

under Order XXXVII of the CPC.

Defendant sought unconditional leave to defend by filing an application under Order XXXVII Rule 3 of CPC. The contention of the Defendant

is that there was another project for LIC India Ltd (hereinafter ''LIC project''). Various interior jobs were assigned to Plaintiff for the LIC project.

It is the allegation of the Defendant that the Plaintiff deliberately started mingling up various accounts of one project with another, despite which

Defendant continued to release the huge payments to Plaintiff. It is the allegation of the Defendant that the Plaintiff has been paid excess amounts of

Rs.10,37,333/- and hence the amount under HPSCBL project is not payable. Defendant however annexed with the application a statement of

account reproduced in the leave to defend application which shows that out of the total invoices raised for Rs.30,60,517/- the amount of

Rs.52,213/- is not payable. Defendant admitted that the balance amount outstanding is Rs.6,46,729/-.

From the stand in the leave to defend, it appears that Defendant does not dispute that the Plaintiff did not execute the works and it is also

admitted that there was no grievance in respect of the work undertaken. The transactions in relation to the LIC project are not relevant to the

present case. Leave to defend was rejected by the Trial Court on the ground that the suit is based upon the written contract dated 21st November

2012. Invoices are admitted and the amount paid also stands admitted. None of the facts being disputed, there is no defence which the Defendant

can raise for non-payment. Accordingly, the Trial Court has decreed the suit.

This Court has perused the pleadings in the suit as also the judgment of the Trial Court. A perusal of the leave to defend application as also the

reply to the legal notice which was sent by the Defendant clearly shows that there is hardly any dispute between the parties and a transaction which

is totally unconnected cannot be raised as a defence in this suit. In reply to the legal notice, the Defendant clearly admitted that the amount

outstanding on account of HPSCBL is Rs.7,12,096/-. The Supreme Court in TVC Skyshop Ltd. v. Reliance Communication and Infra Ltd.

(2013) 11 SCC 754, explained the scope of Order XXXVII of the CPC as under:

An analysis of Order XXXVII shows that the provisions contained therein are applicable to the suits specified in Rule 1(2). Rule

2(1) prescribes the particulars to be incorporated in the suit. Sub-rule (3) of Rule 2 lays down that the Defendant shall not defend the

suit unless he enters appearance and in default of his appearance, the allegations contained in the plaint shall be deemed to be

admitted and the Plaintiff shall be entitled to a decree for a sum not exceeding the sum specified in the summons together with interest

at the specified rate, if any. Rule 3 contains the procedure for the appearance of the Defendant. Sub-rule (5) prescribes time limit of

ten days from the service of summons for judgment within which the Defendant can apply for leave to defend. The concerned Court

can grant leave to defend unconditionally or conditionally. First proviso to this sub-rule lays down that leave to defend cannot be

refused unless the Court is satisfied that the facts disclosed by the Defendant do not indicate that he has substantial defence or that the

defence is frivolous or vexatious. Second proviso to Sub-rule (5) lays down that if the Defendant admits part of the amount claimed

by the Plaintiff then he shall not be granted leave to defend unless the admitted amount is deposited in the Court. Sub-rule (6)

provides for the consequences of the Defendant''s failure to apply for leave to defend or refusal of prayer for leave to defend. In such

an eventuality, the Plaintiff is entitled to judgment forthwith. Sub-rule (7) lays down that if the Defendant is able to show sufficient

cause, the Court can excuse the delay in entering of appearance or in making an application for leave to defend. Rule 4 gives power

to the Court to set aside the decree provided special circumstances exist for doing so. The Court can also stay or set aside execution

and grant leave to the Defendant to defend the suit.

Further, in IDBI Trusteeship Services Ltd. v. Hubtown Ltd. AIR 2016 SC 5321, the Supreme Court upheld the guidelines with respect to leave

to defend under Order XXXVII Rule 3 of the CPC as laid down in Milkhiram (India) (P) Ltd. v. Chamanlal Bros. AIR 1965 SC 1698 and held

as follows:

Accordingly, the principles stated in paragraph 8 of Mechelec''s case will now stand superseded, given the amendment of Order

XXXVII Rule 3, and the binding decision of four judges in Milkhiram''s case, as follows:

a. If the Defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the Plaintiff is not

entitled to leave to sign judgment, and the Defendant is entitled to unconditional leave to defend the suit;

b. if the Defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the

Plaintiff is not entitled to sign judgment, and the Defendant is ordinarily entitled to unconditional leave to defend;

c. even if the Defendant raises triable issues, if a doubt is left with the trial judge about the Defendant''s good faith, or the genuineness

of the triable issues, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing

security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not

defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security;

d. if the Defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of

trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or

security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.

e. if the Defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous

or vexatious, then leave to defend the suit shall be refused, and the Plaintiff is entitled to judgment forthwith;

f. if any part of the amount claimed by the Plaintiff is admitted by the Defendant to be due from him, leave to defend the suit, (even if

triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the

Defendant in court.

The Plaintiff''s case is based on purchase orders and invoices, receipt is which is not disputed, except qua one invoice. The payments made are

broadly admitted and the amount due is also admitted. Thus, this is a fit case for a decree under Order XXXVII of CPC. Leave to defend has

rightly been rejected. The impugned judgment and decree is accordingly upheld.

Defendant had deposited the decretal amount in this Court. The amount lying may be released in favour of Plaintiff. Plaintiff?s counsel under

instructions submits that the amount lying in this Court can be treated as full and final settlement of judgment and decree and no further sum would

be payable in respect of transaction in issue.

In view of this submission, it is directed that upon release of payment in favour of the Plaintiff of the sum lying deposited along with the interest

accrued thereon, the impugned judgment and decree shall be deemed to be satisfied. No further claims would be maintainable. Decree shall be

drawn up accordingly. Payment in favour of Plaintiff be released within two weeks.

Appeal is dismissed with no order as to costs.