CHANDER BHALLA vs RAJEEV BHATNAGAR

* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 10th January, 2024
Pronounced on: 8th April, 2024

+ CS(OS) 619/2022, I.A. 16349/2022, I.A. 1226/2023 & I.A. 3969/2023
CHANDER BHALLA ….. Plaintiff
Through: Ms. Beenashaw Soni with Ms. Mansi Jain and Mr. Ann Joseph, Advocates.
versus

RAJEEV BHATNAGAR …. Defendant
Through: Ms. Anusuya Salwan, Ms. Simran Sakunia and Mr. Bankim Garg, Advocates.
CORAM:
HON’BLE MR. JUSTICE CHANDRA DHARI SINGH

J U D G M E N T

CHANDRA DHARI SINGH, J.
I.A. 3969/2023-Application on behalf of the defendant under Order XXXVII Rule 3(5) read with Section 151 of Civil Procedure Code 1908 seeking Leave to Defend

1. The instant application under Order XXXVII Rule 3(5) of Civil Procedure Code, 1908 (hereinafter CPC) has been filed seeking following reliefs:
“It is therefore, in view of the above said facts and circumstances, most respectfully prayed that this Hon’ble Court may kindly be pleased to grant leave to contest the suit of the plaintiff to the defendant in the interest of justice.
Pass any other order or relief as this Hon’ble Court deems fit and proper on the facts and circumstance of the present case in the interest of justice.”

FACTUAL MATRIX
2. The plaintiff i.e., Chander Bhalla, one of directors of Grand Prix Engineering Private Limited. The defendant i.e. Mr. Rajeev Bhatnagar, is a distant relative of the plaintiff.
3. The plaintiff has filed the instant civil suit alleging that the defendant, being in dire need of funds, sought a loan amounting to Rs.7.5 crores from the plaintiff.
4. It is stated that the defendant continued to make occasional payments till the month of July, 2019, however, the defendant started defaulting in the repayment from the month of August, 2019 and further asked for subsequent loans from the plaintiff company, which was declined in light of the non-payment of the outstanding amount of the previous loan.
5. The defendant sought time till September 2021 to repay the outstanding loan amount and the interest amount on the pretext of the then prevailing pandemic.
6. Pursuant to above, it is asserted that the parties decided to put the terms of the oral loan agreement into a written loan agreement and on 15th September 2021 executed a loan agreement. The aforesaid loan agreement stipulates that the borrower, i.e., the defendant shall be liable to pay a monthly interest to the plaintiff @12% per annum. It was further agreed in the said loan agreement that the defendant would return the entire loan amount as and when demanded by the plaintiff within 90 days. Accordingly, the defendant continued to repay the loan amount in installments.
7. It is alleged by the plaintiff that the defendant failed to make payment of the principal amount including interest. Therefore, by way of an e-mail dated 24th January 2022, the plaintiff demanded return of the principal amount.
8. The plaintiff again vide letter dated 14th February, 2022 demanded repayment of the entire loan amount, along with the interest which was duly replied to vide email dated 15th February, 2022, acknowledging the loan however, the defendant did not make any payment.
9. The plaintiff apprehends that the defendant is systematically selling and disposing off his assets, in an attempt to divert his money and assets after liquidating the same into a company namely, M/s Seven Eleven Leasing Finance Limited, wherein, he is a director along with his sister and father. The defendant has sold as many as five properties making him in possession of the sale amount and yet the defendant failed to repay the loan amount to the plaintiff.
10. In his attempt to recover the money, the plaintiff vide email dated 3rd May, 2022 demanded repayment of the loan amount, along with the interest which was duly replied to vide email dated 3rd May, 2022, by the defendant, thereby, offering certain terms for settlement on the outstanding loan amount which would be applicable to both the loans undertaken by the plaintiff and loan advanced by the company in which the plaintiff is a director i.e., Grand Prix Engineering Private limited. However, the plaintiff as well as the company rejected the said proposal on the ground that the proposal did not include the amount due in arrears of interest and the repayment schedule spread over a period of five years.
11. Pursuant to which the defendant sent another email dated 6th May 2022 and offered to make the payment of the loan amount without interest and in a span of 6 years, which in the opinion of the petitioner was not realistic, therefore he did not agree to the same.
12. The plaintiff approached pre-litigation mediation, during which the defendant gave unrealistic proposals, which were not acceptable to the plaintiff.
13. Aggrieved by the aforesaid non-payment of the loan amount by the defendant, the plaintiff filed the instant suit seeking a decree under Order XXXVII of CPC for Rs.10,31,34,247/-.
SUBMISSIONS
(on behalf of the defendant/applicant).
14. Learned counsel for the defendant submitted that the instant suit is misconceived and untenable and the defendant is not liable to pay the alleged amount. It is further submitted that the loan agreement dated 15th September 2021, executed between the parties is forged and fabricated and the other letters/ emails relied upon by the plaintiff have been obtained under coercion. Since the aforesaid loan agreement which forms the basis of the suit, is neither properly stamped nor duly registered and therefore is liable to be impounded and seized by this Court.
15. It is submitted that in the year 2017, the plaintiff approached the defendant, thereby, seeking investment in the defendant’s business and it was with that understanding that the plaintiff started investing certain amounts with the defendant.
16. It is further submitted that the loan transaction is prohibited under Section 3 of the Punjab Registration of Money Lenders Act, 1983 and Section 3 of the Punjab Prohibition of Private Money Lending Act, 2007.
17. It is submitted that as per Order XXXVII of the CPC, the amount so claimed must be in the form of a written instrument, however, in the present case, there is no admitted written instrument entered into between the parties which makes Order XXXVII of the CPC inapplicable to the facts of the present suit.
18. It is submitted that there are various discrepancies in the statement submitted by the plaintiff. Additionally, in the event that the defendant is given an opportunity to cross-examine the plaintiff, the defendant will be in a position to demonstrate the factum that the averments advanced by the plaintiff are false and fabricated.
19. It is contended that before signing of the Loan Agreement dated 15th September 2021, the plaintiff and the defendant had settled the outstanding interest for the period of August 2019 to September 2021 and thus the defendant paid Rs.1,00,00,000/- in cash as full and final settlement towards the same.
20. It is submitted that on 24th January 2022 the goons deployed by the plaintiff approached the defendant informing him to acknowledge the email dated 24th January 2022 sent by the plaintiff to the defendant. Accordingly, the defendant had no option but to acknowledge the receipt of the e-mail, though the defendant does not admit any contents of the same.
21. It is further submitted that the people who were deployed by the plaintiff again approached the defendant on 15th February 2022 directing the defendant to reply to the plaintiff’s email dated 14th February 2022.
22. It is submitted that the defendant was constantly harassed by the plaintiff and that the plaintiff did not take in account that he had already received a huge amount from the defendant treating the same being given towards interest and cash payments from time to time. Despite the same, the defendant vide e-mail dated 3rd May 2022 proposed terms of settlement.
23. It is therefore submitted that in view of the foregoing submissions, the instant application may be allowed and the defendant/applicant may be granted leave to defend the captioned suit.
(on behalf of the plaintiff/non-applicant)
24. Learned counsel appearing on behalf of the plaintiff/non-applicant submitted that the instant application is not maintainable on the ground that the instant application has been filed after expiry of the limitation period of 10 days of filing leave to defend as the summons for judgment were served on 2nd February 2023, however, the instant application was filed on 15th February 2023.
25. It is further submitted that the defence raised by the defendant is sham and not tenable in the eyes of law. The facts mentioned by the defendant are vague as well as lack merit.
26. It is submitted that the defendant has not averred as to how and in what manner the amount of Rs.1 Crore has been repaid to the plaintiff by him seeking discharge of his liability and that the defendant had made payment of interest @ 12% per annum on the principal amount for the period upto August 2019.
27. It is contended that the defendant has not filed any ledger/statement of account on record to dispute the ledger account of the plaintiff hence, since there is no specific averment in this regard, and the same amounts to admission.
28. It is submitted that pursuant to the admission of amount received by the defendant and payment of interest, the onus lies on the defendant to place on record material facts and prove that he has already discharged his liabilities towards the plaintiff and thus there is no outstanding amount.
29. In view of the foregoing submissions, it is submitted that the instant application seeking leave to defend may be dismissed and the captioned summary civil suit may be allowed.
ANALYSIS AND FINDINGS
30. The matter was heard at length with arguments advanced by the learned counsel for the parties. This Court has also perused the entire material on record and has duly considered the factual scenario of the matter, judicial pronouncements relied upon by the parties, and the pleadings presented by the learned counsel for the parties.
31. It is the case of the plaintiff that the parties i.e., the defendant and the plaintiff were distant relatives and the defendant, citing financial issues took a loan of Rs.7.5 Crores.
32. Pursuant to which an oral loan was converted into a written Loan Agreement dated 15th September 2021. It is contended that the said agreement stipulated that the borrower, i.e., the defendant would pay an interest amount @12% per annum.
33. It has been contended that the defendant made part payment of the loan amount till July, 2019, and thereafter started defaulting in the repayment of the same. It has been further contended that the defendant, by citing financial turmoil sought some time to make repayment of the loan amount. It has also been contended that owing to the COVID pandemic, the defendant again did not make the repayment of the loan amount, however, assured the plaintiff that the payment would be made once the businesses gain some normalcy. It is further submitted that the director of the plaintiff company and the defendant remained in constant touch throughout the pandemic and the said debt was acknowledged by the defendant on multiple occasions, by way of emails and messages via Whatsapp etc.
34. It is further contended that the defendant, during their pre-litigation meetings put forth certain payment plans, which were out rightly rejected by the plaintiff company on the ground that the said plan spanned over a period of 5 years, which was not acceptable to the plaintiff company, especially due to the fact that the defendant had not been repaying the loan amount for a number of years. It is contended that since the said repayment plan did not work out, the plaintiff company preferred to file the present suit, thereby, seeking recovery of the amount extended as a loan.
35. In rival contentions, the defendant preferred an application seeking leave to defend the suit under Order XXXVII Rule 3 (5) of CPC on the ground that the summary suit filed for recovery is baseless and is liable to be dismissed since the amount being recovered was never extended as a loan amount. It has been contended that the amount in dispute was only in the form of an investment made in the defendant’s business and the loan agreement dated 15th September 2021 is false and fabricated. It has also been contended that all forms of communication i.e., emails and Whatsapp messages were obtained under coercion and the director of the plaintiff company had extended threats to the defendant in order to obtain acknowledgement on emails and Whatsapp messages.
36. It is contended that before signing the Loan Agreement dated 15th September 2021, the plaintiff and the defendant had settled the outstanding dues for a sum of Rs.1,00,00,000/- in cash as full and final settlement.
37. It is contended that as per the contents of the Loan Agreement that there are various discrepancies in the statement submitted by the plaintiff and in the event that the defendant is given an opportunity to cross-examine the plaintiff, the defendant will be in a position to demonstrate the fact that the averments advanced by the plaintiff are false and fabricated.
38.  In the instant case, the dispute revolves around under Order XXXVII Rule (3) (v) of the CPC. The issue which falls for adjudication before this Court is whether the defendant’s application seeking leave to defend should be allowed, and in order to adjudicate upon the same, it is pertinent for this Court to set out the settled legal propositions qua the principle of leave to defend. The relevant portion of the above said provision has been reproduced hereunder:
“Order XXXVII Rule 3 (v) of the CPC – Application seeking leave to defend
“(5) The defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just: Provided that leave to defend shall not be refused unless 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 vexatious:
Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court…”
39. Order XXXVII CPC aims to facilitate granting relief to the plaintiff in cases where there is an undisputed liquidated claim against the defendant and the defences raised by the defendant are substantial defence. It ensures a summary judgment is such cases without subjecting it to procedure as prescribed for the regular suit.
40. In case the defendant satisfies the Court that he has raised a substantial defence, there are triable issues by way of plea, the plaintiff is not entitled to summary judgment, and the defendant is entitled to unconditional leave to defend the suit.
41.   In essence, the effectiveness of Order XXXVII of the CPC lies in the optimization of the litigation process, thus offering a faster and more efficient method of resolution of disputes. Given the summary character of the proceedings, Order XXXVII of the CPC does away with the traditional need that the defendant provides a written statement. Moreover, the defendant has a deadline for appearing in Court and the plaintiff may ask for a default judgment if the defendant does not comply with the direction of the Court to appear.
42. This departure from the set norm is predicated on the idea that the defendant’s defence, if any, ought to be brought up right away when the plaintiff’s claim is founded on a precisely defined contractual term. The effectiveness of Order XXXVII of the CPC is evident from the timeline which the CPC mandates the suit to be tried and decided.
43. Legislature enacted the aforesaid provision with the aim of preventing financial harm in the business disputes and furthermore prescribed rigid timelines to ensure that a litigant is furnished with a fair opportunity to convey their case, yet in a definitive time period.
44. The principles governing grant or refusal of leave to defend have been discussed by various Courts time and again. The Hon’ble Supreme Court in one of its landmark judgments namely IDBI Trusteeship Services Ltd. v. Hubtown Ltd.1 has discussed in length the yardstick needed to be followed in an application seeking leave to defend in a recovery suit filed under Order XXXVII of the CPC. The relevant portion of the same is as follows:
“16. It is thus clear that Order 37 has suffered a change in 1976, and that change has made a difference in the law laid down. First and foremost, it is important to remember that Milkhiram case [Milkhiram (India) (P) Ltd. v. Chamanlal Bros., AIR 1965 SC 1698 : (1966) 68 Bom LR 36] is a direct authority on the amended Order 37 provision, as the amended provision in Order 37 Rule 3 is the same as the Bombay amendment which this Court was considering in the aforesaid judgment. We must hasten to add that the two provisos to sub-rule (3) were not, however, there in the Bombay amendment. These are new, and the effect to be given to them is something that we will have to decide. The position in law now is that the trial Judge is vested with a discretion which has to result in justice being done on the facts of each case. But Justice, like Equality, another cardinal constitutional value, on the one hand, and arbitrariness on the other, are sworn enemies. The discretion that a Judge exercises under Order 37 to refuse leave to defend or to grant conditional or unconditional leave to defend is a discretion akin to Joseph’s multi-coloured coat — a large number of baffling alternatives present themselves. The life of the law not being logic but the experience of the trial Judge, is what comes to the rescue in these cases; but at the same time informed by guidelines or principles that we propose to lay down to obviate exercise of judicial discretion in an arbitrary manner. At one end of the spectrum is unconditional leave to defend, granted in all cases which present a substantial defence. At the other end of the spectrum are frivolous or vexatious defences, leading to refusal of leave to defend. In between these two extremes are various kinds of defences raised which yield conditional leave to defend in most cases. It is these defences that have to be guided by broad principles which are ultimately applied by the trial Judge so that justice is done on the facts of each given case.

***

17.3. 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.

17.4. 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.

17.5. 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.

17.6. 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.”

45. Further, in a case titled Sudin Dilip Talaulikar v. Polycap Wires (P) Ltd2 the Hon’ble Supreme Court, while reaffirming the law laid down in IDBI Trusteeship Services Ltd. (Supra) observed as under:
“10. In a summary suit, if the defendant discloses such facts of a prima facie fair and reasonable defence, the court may grant unconditional leave to defend. This naturally concerns the subjective satisfaction of the court on the basis of the materials that may be placed before it. However, in an appropriate case, if the court is satisfied of a plausible or probable defence and which defence is not considered a sham or moonshine, but yet leaving certain doubts in the mind of the court, it may grant conditional leave to defend. “
46. The Supreme Court in the latest judgment of B.L. Kashyap & Sons Ltd. v. JMS Steels & Power Corpn3, has reiterated the principles pertaining to Order XXXVII of the CPC and the relevant extract of the aforesaid judgement is reproduced herein as below:
“32. The High Court took note of the fact that the trial court relied upon the decision in Mechelec Engineers [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] and observed that the applicable principles were those contained in the later decision of this Court in IDBI Trusteeship [IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568 : (2017) 1 SCC (Civ) 386] . Having regard to the question at hand, it shall be worthwhile to read together the principles stated in the said two decisions [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] , [IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568 : (2017) 1 SCC (Civ) 386] of this Court.

32.1. In Mechelec Engineers [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] , the principles for consideration of a prayer for leave to defend in a summary suit were laid down by this Court in the following terms: (SCC p. 690, para 8)
“8. In Kiranmayi Dasi v. J. Chatterji [Kiranmayi Dasi v. J. Chatterji, 1945 SCC OnLine Cal 114 : ILR (1945) 2 Cal 145 : AIR 1949 Cal 479 : (1944-45) 49 CWN 246] , CWN at p. 253 Das, J., after a comprehensive review of authorities on the subject, stated the principles applicable to cases covered by Order 17 CPC in the form of the following propositions: (SCC OnLine Cal)
‘… (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 defence yet shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff’s 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 condition 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.’ ”

***

33. It is at once clear that even though in IDBI Trusteeship [IDBI Trusteeship Services Ltd. v. Hubtown Ltd., (2017) 1 SCC 568 : (2017) 1 SCC (Civ) 386] , this Court has observed that the principles stated in para 8 of Mechelec Engineers case [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] shall stand superseded in the wake of amendment of Rule 3 of Order 37 but, on the core theme, the principles remain the same that grant of leave to defend (with or without conditions) is the ordinary rule; and denial of leave to defend is an exception. Putting it in other words, generally, the prayer for leave to defend is to be denied in such cases where the defendant has practically no defence and is unable to give out even a semblance of triable issues before the court.

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 bona fide 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 appears 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.

33.2. Thus, it could be seen that in the case of substantial defence, the defendant is entitled to unconditional leave; and even in the case of a triable issue on a fair and reasonable defence, the defendant is ordinarily entitled to unconditional leave to defend. In case of doubts about the intent of the defendant or genuineness of the triable issues as also the probability of defence, the leave could yet be granted but while imposing conditions as to the time or mode of trial or payment or furnishing security. Thus, even in such cases of doubts or reservations, denial of leave to defend is not the rule; but appropriate conditions may be imposed while granting the leave. It is only in the case where the defendant is found to be having no substantial defence and/or raising no genuine triable issues coupled with the court’s view that the defence is frivolous or vexatious that the leave to defend is to be refused and the plaintiff is entitled to judgment forthwith. Of course, in the case where any part of the amount claimed by the plaintiff is admitted by the defendant, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the court.

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.”

47. In view of the aforesaid decisions, it is a settled position of law that leave to defend filed by the defendant be allowed in cases where the defendant raises triable issues i.e., the alleged facts are of such a nature which entitle the defendant to lead evidence, interrogate the plaintiff or to cross-examine his witnesses. In such cases, leave to defend shall not be denied. The Court may refuse leave to defend in cases where the Court is of the view that the grant of leave would merely to protract the litigation proceedings.
48. The law prescribes certain established guidelines, which, if found to be existed in a certain case, application for leave to defend may be allowed. The Hon’ble Supreme Court categorically states that in the event a defendant satisfies the Court that he has a substantial defence which in the opinion of the concerned Court is likely to succeed, the plaintiff in such case would not be entitled to the summary judgment, instead the defendant will be entitled to unconditional leave to defend the suit. Furthermore, an unconditional leave to defend is granted by a Court when it is shown by the defendant that he has a reasonable defence, although not a positively good defence. Apart from the aforesaid, there are certain other guidelines narrated by the Hon’ble Supreme Court which enunciates the principle to grant conditional leave to defend. Another point can be noted upon reading of IDBI Trusteeship Services Ltd. (Supra), as per which 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 the Court.
49. The inclusion of a summary judgment presents several difficulties. The adjudicating Court is entrusted with the intricate duty of evaluating the evidence and determining the legal validity of the case, notwithstanding the absence of a full-fledged trial. This requires a thorough analysis of the legal documents and evidence to verify that all the necessary conditions for a summary judgment are satisfied. When exercising this discretionary authority, the Court must be watchful to prevent any abuse of the summary procedure.
50. It does not serve as a means to bypass the standard trial procedure, but rather as a method to promptly resolve matters that fulfil the strict requirements established by Order XXXVII of the CPC. The Court’s ability to grant summary judgment is limited to a thorough evaluation of the relevant facts and legal matters.
51. The implementation of Rule 3 of Order XXXVII of the CPC necessitates a careful equilibrium between promptness and impartiality. The approach of the said provision is simply to ensure prompt resolution of commercial disputes. However, the effectiveness of the process thereunder depends on strictly following its procedural rules and carefully using judicial discretion.
52. Under Order XXXVII of the CPC, the purpose is to allow the plaintiff to swiftly recover their dues without the need for a lengthy regular lawsuit. However, Rule 3 of the said Order states that if the defendant can convince the Court that they have a valid defence or that there are genuine issues that need a trial, the plaintiff cannot be granted to proceed with a summary judgment. In such cases, the defendant is given unconditional permission to defend the lawsuit. Since this Court has already laid out the scheme of the provision under which the relief is sought, it is now imperative to apply the said provision on the facts of the present case.
53. Now adverting to the merits of the instant application. The issue before this Court is to adjudicate upon whether the issues raised by the defendant qua the application seeking leave to defend constitute to be triable in nature.
54. At this stage, this Court deems it appropriate to categorically analyse the defence raised by the defendant by way of instant application and whether the defendant is entitled to leave to defend.
55. The first defence undertaken on behalf of the defendant is the fact that the signature obtained on loan agreement dated 15th September 2021 has been obtained through coercion and the same is false and fabricated. Moreover, it has been stated that the said loan agreement is not duly stamped. In order to adjudicate upon the same, it would be imperative for both parties to submit their evidence and only then would it be determinable if the said loan agreement is authentic and in order to ascertain the same, a trial has to be conducted, defendant making the said contention of the loan agreement being fabricated, an issue which may be triable in nature.
56. It is apposite to note, that the crux of the dispute before this Court is primarily concerned with the recovery of an amount extended as a loan by the plaintiff to the defendant, the crux of the money suit preferred by the plaintiff rests with the loan agreement dated 15th September 2021since the terms of payment etc. are encapsulated therein. It is hard to determine the maintainability of suit in the absence of such loan agreement since the legality of the document which forms the basis of the present suit is being disputed.
57. The defendant qua the loan agreement has alleged that the said document, which forms the crux of the dispute is forged and fabricated. In order to determine the same, the Court has to go beyond the documents on record and determine the same after evidence is tendered by the parties. Determining the validity of a document would require the parties to cross examine and tender evidence by way of an affidavit etc., it is only then that the Court will be able to determine whether the allegation of the said agreement being fabricated holds any ground. That being said, this Court is of the view that the defence undertaken by the defendant qua the loan agreement, constitutes to be an issue which requires trial.
58. Insofar as the remaining defences are concerned, the defendant also raised a defence with regard to the loan amount being an investment made by the plaintiff in the defendant’s company. It is pertinent to note that the crux of the matter revolves around recovery of the loan amount, however, the respondent has alleged that such an amount does not exist and the documents in support of the same are forged, fabricated having been obtained under coercion.
59. The defendant has further alleged that the parties are known to each other due to which the offer for investment was extended by the plaintiff. The said allegation has been rebutted by the plaintiff on the ground that the defendant has failed to disclose the purpose of the investment and any details surrounding the same. This Court cannot determine whether the said defence raised by the defendant holds any ground since the entire dispute pertains to the amount in question. Bearing in mind the aforesaid, the said contention raised by the defendant is plausible, but improbable. This Court is of the view that in order to adjudicate upon the same, a trial is required to be conducted since the aforesaid issue can only be decided if the parties tender their evidence.
60. Further, the defendant has also claimed that the loan agreement is not stamped and registered, however, a perusal of the same discloses that a witness was present while the said agreement was being executed. Again, the present question cannot be addressed without taking a statement of the witness to the loan agreement. Since the document is not stamped or registered, it raises a question with regard to the validity of the same. This again, becomes an issue which can only be decided at trial.
61. Furthermore, the defendant has claimed that the Whatsaap messages and emails have been obtained through coercion and the plaintiff had sent certain persons to threaten the defendant to send the Whatsaap messages and emails, thereby, acknowledging the loan amount. The aforesaid defences raises triable issue before this Court.
62. This Court has carefully examined all defences raised by the defendant vide his application seeking leave to defend. Once again it becomes imperative to lay down the principles governing leave to defend. As discussed earlier on, the scheme of the Act is such that any application seeking leave to defend must be allowed in the event that the individual moving such application is raising a defence that must be decided at the stage of trial. The Court also must take into consideration the fact that the defence so raised can be plausible but improbable, however, the Courts have the discretion to decide the same depending upon the facts and circumstances of the case.
63. The instant case which is a dispute pertaining to the recovery of an amount of Rs.10,31,34,247/- and additional pendent-lite and future interest @12% per annum. It is stated that the said amount was extended as a loan by the plaintiff to the defendant in time of his need and was substantiated by way of the alleged loan agreement dated 15th September 2021.
64. In his application seeking leave to defend, the defendant has categorically stated that the alleged loan agreement does not exist and signatures on the same have been received under threat and coercion.
65. It is observed that the crux of the matter pertains only to the said loan amount and the document substantiating the same has been challenged by the defendant.
66. As per the scheme of Order XXXVII Rule 3 (v) of the CPC, it has been categorically laid down that in the event that a triable issue has been raised, it is imperative for the Courts to allow the application seeking leave to defend.
67. Since the very crux of the matter pertains to the loan amount and the loan agreement, this Court cannot allow the captioned summary suit without a trial. However, certain issues raised by the defendant are plausible but improbable such as the individuals sent to threaten the defendant to obtain signatures under coercion. This Court is only concerned with the fact that the very agreement which lays down the terms of the agreement remains in challenge and to adjudicate upon the same a full- fledged trial is required.
68. Accordingly, this Court is of the view that the respondent has a substantial defence which is likely to succeed and in view of the same, the respondent is entitled to unconditional leave to defend the above said recovery suit.
CONCLUSION
69. The plaintiff is relying on the loan agreement dated 15th September 2021 to aver that the plaintiff has advanced a loan to the defendant. The defendant in its leave to defend has refuted the aforesaid Agreement contending that the Agreement is not stamped, it was signed by the defendant under coercion and is against the local laws of the State of Punjab.
70. Order XXXVII of the CPC provides for summary trial of suit in certain specific cases wherein the defense raised by the defendant is sham and untenable. In the instant case, this Court is of the view the instant application seeking leave to defend has raised triable issues and a full- fledged trial is required.
71. It is further held that the captioned civil suit involves disputed questions of fact and law and the same requires the parties to lead evidence.
72. It further held that the plaintiff is not entitled to any decree on the basis of alleged admission made by the defendant.
73. Accordingly, the leave to defend filed by the defendant in the captioned civil suit is allowed.
CS(OS) 619/2022
74. The defendant is directed to file written statement/reply to the plaintiff’s suit within a period of four weeks from today. Along with the written statement, the defendant shall also file an affidavit of admission and denial of the documents, without which the written statement shall not be taken on record.
75. The plaintiff is also directed to file an affidavit of admission and denial of the documents and is also given liberty to file replication within a period of four weeks from receipt of the copy of the written statement.
76. List before the learned Joint Registrar on 10th May 2024.
77. The judgment be uploaded on the website forthwith.

(CHANDRA DHARI SINGH)
JUDGE
APRIL 8, 2024
rk/db/ryp

1 2018 SCC OnLine SC 2795
2 (2019) 7 SCC 577
3 (2022) 3 SCC 294
—————

————————————————————

—————

————————————————————

I.A. 3969/2023 in CS (OS) 619/2022 Page 26 of 26