Full Text
HIGH COURT OF DELHI
Date of Decision: 10th February, 2023
ITC LIMITED ..... Plaintiff
Through: Mr.Anil K. Kher, Sr. Adv. with Mr.Ankur Gosain, Mr.Kunal
Kher, Advs.
Through: Mr.Mahesh Kumar and Mr.Shubham Gupta, Advs
JUDGMENT
1. For the reasons stated in the application, the delay in filing the written submissions is condoned.
2. The application stands disposed of. I.A.1220/2016
3. This suit has been filed under Order XXXVII of the Code of Civil Procedure, 1908 (hereinafter referred to as the ‘CPC’) seeking recovery of an amount of Rs.1,97,37,562/- alongwith interest due thereon from the defendant, alleging therein that the plaintiff had sold and delivered various educational and stationery products from time to time to the defendant on the basis of various requisitions/orders made by the defendant, both personally as also telephonically. The defendant had been making on account payments in respect to various invoices received by it from time to time, which were duly credited by the plaintiff in its Books of Account. Taking advantage of the credit policy of the plaintiff ranging between 30 days and 120 days from the date of the sale, disbursed payments against such invoices were made by the defendant. It is asserted that the defendant duly acknowledged and confirmed an outstanding amount of Rs.53,85,094/- to be due and payable by it as on 31.12.2012. Even thereafter, the relationship between the parties continued and the total outstanding of the defendant increased to Rs.1,37,14,063/-. As the defendant was not making the payment, the plaintiff issued a legal notice dated 09.12.2013 followed by another notice dated 26.06.2014 to the defendant claiming the above amount. The defendant did not reply to the said notices, forcing the plaintiff to file the present suit.
4. In its application seeking leave to defend, the defendant denies the alleged acknowledgement of debt stating that his signatures have been forged on the said documents. As far as the future transactions are concerned, the defendant states that no such supplies were received by the defendant.
5. The learned counsel for the defendant further submits that, in any case, as the present suit has been filed relying upon the purported ledger of the plaintiff of the transactions between the parties, the same is not maintainable under Order XXXVII as a Summary suit. In support, he places reliance on the judgments dated 15.09.2016 of this Court in Inventa Cleantec Pvt. Ltd. v Amit Mudgal, 2016 SCC OnLine Del 5144; Associates India Financial Services (P) Ltd. v. Atwal and Associates and Ors., 2012 SCC OnLine Del 4150 and Juki Singapore Pte Ltd. v. Jay Cee Enterprises Pvt. Ltd. and Ors., 2009 SCC OnLine Del 4284.
6. The learned counsel for the defendant further submits that the defendant has raised substantial defence in the suit inasmuch as the document of acknowledgement relied upon by the plaintiff has been denied and alleged by the defendant as a forged document. He further submits that the fact of any supply being made against the subsequent invoices is also denied by the defendant and would need to be proved by the plaintiff in the trial. Placing reliance on the judgments of the Supreme Court in B.L. Kashyap and Sons Ltd. v. JMS Steels and Power Corporation and Anr., (2022) 3 SCC 294; IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568 and of the High Court of Gujarat in Jashbhai Motibhai Patel v. Hasmukhbhai Ravjibhai Patel, 1990 SCC OnLine Guj 74, he submits that the present case would warrant grant of an unconditional leave to defend.
7. In rejoinder, the learned senior counsel for the plaintiff has asserted that the denial of the acknowledgment by defendant is mala fide. He submits that, in fact, relying upon the same acknowledgement of debt, the plaintiff had addressed two legal notices to the defendant to which the defendant did not give any reply. The defendant also did not deny the fact of executing the said acknowledgment.
8. On future supplies, he has drawn my attention to the fact that the subsequent invoices have been filed by the defendant himself. The plaintiff has also filed the delivery challans evidencing the proof of the delivery of the goods there-against. The said delivery challans bear the acknowledgment of the receipt of the goods by the defendant.
9. The learned counsel for the defendant, however, submits that the said delivery challans do not bear the acknowledgment of the defendant and are denied by the defendant.
10. I have considered the submissions made by the learned counsels for the parties.
11. As far as the plea of non-maintainability of the Suit claiming recovery of an amount based on multiple invoices, part-payments, and basically on a ledger, under Order XXXVII of the CPC is concerned, in Inventa Cleantec Pvt. Ltd (supra), this Court has observed as under:
12. In Juki Singapore Pte Ltd. v. Jay Cee Enterprises Pvt. Ltd. and Ors (supra), another learned Single Judge of this Court has observed as under: “9. Order 37 of the CPC was intended to be an exception to the ordinary adversarial adjudicatory process adopted in this country and in which process certain delays owing to the requirement of giving opportunity of being heard and lead evidence were implicit. It was thought that where the suit was only for recovery of money on the basis of a document, the genuineness whereof could not be doubted or where owing to the existence of a written document disclosing the amount claimed in the suit, it was expedient to shift the onus to the defendant, it was enacted that the defendant would not be entitled to contest the suit till satisfies the Court that he had a defence. However, I find myself unable to apply the said principles to the instant suit. I am unable to deduce from any document or documents the amount due. Merely because the claim is based on documents would not make the suit fall under Order 37 of the CPC. Claims in a large number of suits are based on documents but such suits do not fall under Order 37. Where a large number of documents have to be collated, interpreted and effect thereof to be adjudicated in juxtaposition of other documents, merely because the suit is based on documents would not make it fall under Order 37 of the CPC. That is the position in the present case.”
13. The same learned Single Judge in Associates India Financial Services (P) Ltd. v. Atwal and Associates and Ors. (supra), relying upon an earlier judgment in M/s K&K Health Care Pvt. Ltd. v. M/s Pehachan Advertising, 2012 SCC OnLine Del 426, observed as under: “5. The object of an Order 37 CPC suit is that on the basis of the documents specified therein the liability towards the plaintiff is admitted. Only when the liability which is admitted in the dishonoured instrument or in the written document containing a liquidated demand as payable to the plaintiff, suits can be filed under Order 37 CPC. Those suits claiming amounts which are only balances due at the foot of account cannot be treated as falling under Order 37 CPC because the suit claim is based on the account and the amount claimed is not a liquidated amount arising/payable to the plaintiff on an instrument on the limited types which are the subject matter of Order 37 CPC. Entries and statements of account have necessarily to be proved as per Section 34 of the Evidence Act,1872 for the balance at the foot of the account to be arrived at. The present suit plaint also makes no mention of any written acknowledgment of debt, which may have amounted to a written agreement containing the liquidated demand with interest arising.”
14. The learned senior counsel for the plaintiff, placing reliance on the judgment of this Court in Sunpro Integrated Communication Services Ltd. v. Capricot Technologies Pvt. Ltd & Anr., 2020 SCC OnLine Del 2284, submits that a suit under Order XXXVII of the CPC can be maintained even on the basis of an amount outstanding on invoices. In my opinion, the said judgement cannot come to the aid of the plaintiff. In the said case, the appellant therein had raised a purchase order. In lieu of the purchase order, the appellant had issued two cheques. The items supplied by the respondent as per the purchase order were successfully installed. It was the case of the respondent that the two invoices were raised and duly accepted/signed by the representative of the appellant. Out of the two cheques issued by the appellant, one was dishonoured. It was the case of the respondent that the appellant had issued another cheque of lower amount, thus leaving the balance payable. It was on those facts that the learned Single Judge of this Court observed as under:
15. Clearly, the above factual situation does not operate in the present case. In the present case, the claim of the plaintiff is not on the basis of a single supply for which payments were being made by the defendant in part. There are multiple invoices alleged to be raised by the plaintiff and multiple payments were made by the defendant. Clearly, the present suit is based on accounts maintained of the multiple transactions and not on documents mentioned in Rule 1(2)(a) of Order XXXVII of the CPC or for recovery of a debt or liquidated demand in money based on a written contract.
16. In view of the law expended by this Court in the above judgments, the present suit is not maintainable under the provision of Order XXXVII of the CPC.
17. At this stage, I would also note that the defendant has also raised a defence of the acknowledgment relied upon by the plaintiff to be a forged document. He further denies the delivery challans which have been relied upon by the plaintiff in support of its claim that the goods against the subsequent invoices were duly delivered to the defendant. These, therefore, would be disputed questions of fact and would require evidence. At this stage, it cannot be said that the defence raised by the defendant is so sham so as to deny the leave to defend. In case the defence raised by the defendant is ultimately found to be false and deliberately made only to deny the plaintiff its dues, the Court is not powerless and can deal with the said defendant at an appropriate stage. In this regard, the law for grant or denial of leave to defend has been recently expounded by the Supreme Court in B.L. Kashyap and Sons Ltd. (supra), in the following words: “33.1. As noticed, if the Defendant satisfies the Court that he has substantial defence, i.e., a defence which is likely to succeed, he is entitled to unconditional leave to defend. In the second eventuality, where the Defendant raises triable issues indicating a fair or bonafide or reasonable defence, albeit not a positively good defence, he would be ordinarily entitled to unconditional leave to defend. In the third eventuality, where the Defendant raises triable issues, but it remains doubtful if the Defendant is raising the same in good faith or about genuineness of the issues, the Trial Court is expected to balance the requirements of expeditious disposal of commercial causes on one hand and of not shutting out triable issues by unduly severe orders on the other. Therefore, the Trial Court may impose conditions both as to time or mode of trial as well as payment into the Court or furnishing security. In the fourth eventuality, where the proposed defence appear to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of payment into the Court or furnishing security or both, which may extend to the entire principal sum together with just and requisite interest. xxx
33.3. Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the Rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one. Even in the case of raising of triable issues, with the Defendant indicating his having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the Defendant fails to show any genuine triable issue and the Court finds the defence to be frivolous or vexatious.”
18. In IDBI Trusteeship Services Ltd. (supra), the Supreme Court laid down the principles governing grant of Leave to Defendant under Order XXXVII Rule 3 of the CPC in the following words:
19. At this stage, the learned senior counsel for the plaintiff submits that the defendant in its application seeking leave to defend has admitted that it had issued an acknowledgment of the amount due and payable as in November, 2012. He submits that in the facts of the present case, the defendant should be asked to secure at least this amount. He submits that pursuant to the order dated 21.10.2019, the defendant had filed an affidavit dated 12.02.2020, and in paragraph 3 thereof he admits that the outstanding against the defendant as on 30.11.2012 was Rs.39,79,297/-.
20. I am not persuaded by the submission made by the learned senior counsel for the plaintiff. The said affidavit in paragraph 4 and 5 thereof, subsequent to the above admission, also states that an amount of Rs.35 Lakh has been paid by the defendant after such acknowledgment and the defendant also claims credit notes of Rs.14,21,807/-. The affidavit cannot be read in parts to infer an admission of liability. The affidavit has to be read as a whole.
21. As far as claim of payments made by the defendant post the acknowledgment of November 2012, the plaintiff disputes the payment made as also states that these were against further supplies made post the acknowledgment. The learned senior counsel for the plaintiff submits that the defendant has not given details of further supply made to the defendant and is also not entitled to the credit note.
22. In my opinion, even the above plea of the plaintiff would also require the parties to lead their respective evidence and therefore, entitle the defendant to the unconditional leave to defend this Suit..
23. In view of the above, the application is allowed. The defendant is granted leave to defend the present suit. CS(COMM) 613/2016 & I.A. 11612/2015
24. The defendant shall file the written statement/reply to the application within a period of four weeks from today. Along with the written statement, the defendant shall also file the affidavit of admission/denial of the documents of the plaintiff, without which the written statement shall not be taken on record.
25. Liberty is given to the plaintiff to file a replication within a period of four weeks of receipt of copy of the written statement. Along with the replication, if any, filed by the plaintiff, the affidavit of admission/denial of documents of the defendant be filed by the plaintiff, without which the replication shall not be taken on record.
26. If any of the parties wish to seek inspection of any documents, the same shall be sought and given within the timelines.
27. List before the learned Joint Registrar (Judicial) on 26th May,
2023.
NAVIN CHAWLA, J FEBRUARY 10, 2023