SAPNA & ANR. vs SHIVESH GARG

$~65
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision: 09.12.2024
+ RFA 861/2024, CM APPL. 71847/2024 & CM APPL. 71846/2024
SAPNA & ANR. ….Appellants
Through: Mr. Shailendra Ojha, Advocate

versus

SHIVESH GARG …..Respondent
Through: None

CORAM: JUSTICE GIRISH KATHPALIA

J U D G M E N T (ORAL)
1. The appellants (wife & husband) have assailed judgment and decree dated 30.05.2024 of the learned District Judge, West, Tis Hazari Courts Delhi, whereby their application for leave to defend the suit filed by the present respondent under Order XXXVII CPC was dismissed. Although the appellants have also challenged order dated 04.10.2024 of the learned trial court whereby the application for review of order dated 30.05.2024 was also dismissed, but in view of the provision under Order XLIII Rule 1(w) CPC the appeal against order dated 04.10.2024 is not pressed by them. Having heard learned counsel for appellants and having examined the records, I find it not a fit case to even issue notice to the other side.

2. Briefly stated, circumstances relevant for the present purposes are that the present respondent filed a summary suit under Order XXXVII CPC seeking recovery of Rs.7,77,500/- alongwith pendente lite and future interest at a rate of 18% per annum against the appellants, pleading that the appellants are running a jewellery shop and had cordial relations with him, so in the month of April 2020 at request of the appellants he advanced them a friendly loan of Rs.5,00,000/- for a period of 16 months and to that effect a loan agreement dated 19.06.2020 also was executed between the parties; that the said loan amount consisted of Rs.4,50,000/- transferred through NEFT by the respondent to the bank account of the appellants on 20.04.2020 and the balance amount of Rs.50,000/- was handed over to them in cash, as recorded in the loan agreement dated 19.06.2020; and that at the time of execution of loan agreement, the appellants delivered a post-dated cheque of Rs.5,00,000/- to him towards repayment of loan, which cheque got dishonoured with the remarks that the payment had been stopped by the appellants.

2.1 In the summary suit filed by the respondent under Order XXXVII CPC, upon service of summons for judgment, the appellants filed application under Order XXXVII Rule 3(5) CPC seeking leave to defend. Although the application for leave to defend was delayed by five days, the learned trial court condoned the delay.

2.2 The appellants sought leave to defend the suit on the ground that the loan amount had already been paid back by them to the respondent during the period from 01.08.2020 to 01.07.2022 by way of monthly instalments of Rs.25,000/- each with interest of Rs.1,00,000/-; and that despite having received back the entire loan amount, the respondent did not return the security cheque and the loan agreement.

2.3 After hearing both sides, the learned Trial Court passed the impugned judgment and decree after dismissing the application for leave to defend, broadly on the grounds that the appellants had admitted having availed loan of Rs.5,00,000/- from the respondent and having executed the loan agreement as well as issued the repayment cheque which got bounced. The learned Trial Court after traversing through the pleadings recorded that the appellants had not placed on record any receipt issued by the respondent reflecting the alleged repayment of the loan.

3. Hence, the present appeal.

4. Learned counsel for appellants contends that the impugned judgment and decree is not sustainable in the eyes of law since the appellants had been able to set up a triable issue and reasonable defence to the suit. Learned counsel for appellants vehemently contends that the entire loan amount already stood paid back, so nothing is due and payable by the appellants. Further, learned counsel for appellants refers to the document Annexure A12 to demonstrate that the loan amount stood paid back. No other argument has been advanced.

5. The legal position as regards scope of grant or denial of leave to defend a suit under Order XXXVII CPC is now well settled. In plethora of judicial pronouncements, the Supreme Court laid down the principles on which an application for leave to defend has to be examined by the trial court. In one such case titled: IDBI Trusteeship Services Limited vs. Hubtown Limited, (2017) 1 SCC 568, the Hon’ble Supreme Court held thus:

“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. Accordingly, the principles stated in para 8 of Mechelec case [Mechelec Engineers & Manufacturers v. Basic Equipment Corpn., (1976) 4 SCC 687] will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four Judges in Milkhiram case [Milkhiram (India) (P) Ltd. v. Chamanlal Bros., AIR 1965 SC 1698 : (1966) 68 Bom LR 36] , as follows:
17.1. 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.
17.2. 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.
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.”

6. In the present case, the appellants explicitly admitted in their application for leave to defend that they availed a friendly loan of Rs. 5,00,000/- from the respondent; that they executed the loan agreement dated 24.06.2020; and that they signed the cheque of repayment of the loan. However, the appellants further pleaded that the said repayment cheque signed by them was a blank cheque, given as security towards repayment of loan since the respondent promised to return the cheque and tear away the loan agreement after repayment of the loan amount. The appellants further pleaded having repaid the entire loan amount by way of monthly instalments of Rs. 25,000/- during the period from 01.08.2020 to 01.07.2022, which included interest of Rs. 1,00,000/-. As mentioned above, during arguments, learned counsel for appellants has referred to Annexure A12 as document of repayment of the loan.

7. So far as Annexure A12 is concerned, the same is only a true typed copy of some alleged WhatsApp screenshot, enlisting two jewellery articles against two different amounts and few cash entries of different amounts. The printout of the said WhatsApp screenshot has not been filed. Nothing at all can be deciphered from the said Annexure. More importantly, the said Annexure goes completely contrary to the defence set up by the appellants insofar as the defence set up was repayment of the loan amount by way of monthly instalments of Rs.25,000/-, while Annexure A12 mentions list of different amounts with different headings and that too with absolutely no reference to the loan amount in question.

8. Admittedly, the appellants received a sum of Rs.5,00,000/- from the respondent towards loan by way of loan agreement, and in the same transaction, they also issued the repayment cheque of Rs. 5,00,000/-. The plea of the appellants that they signed blank cheque does not sound believable at all. It is nobody’s case that the appellants are illiterate persons, who would sign blank cheque. The appellants are admittedly engaged in their independent business. In such cases, if the defendant is allowed leave to defend the suit, it would lead to travesty of justice by making the plaintiff undergo protracted rigmaroles of civil trial.

9. Further, there is no explanation at all from the appellants as to why they did not obtain any receipt of the alleged instalments of repayment of loan amount or as to why they did not take back the original loan agreement and/or the repayment cheque. Even according to the appellants, the repayment was by way of monthly instalments of Rs.25,000/- each, but none of those instalments were through any bank transaction or with a cash receipt. As correctly opined by the learned Trial Court, version of the appellants that they paid back the entire loan amount is not believable at all. The defence set up by the appellants is completely frivolous and vexatious, so they have been rightly denied leave to defend.

10. I am unable to find any infirmity in the impugned judgment and decree, so the same are upheld and the present appeal along with the accompanying applications are dismissed.

GIRISH KATHPALIA
(JUDGE)
DECEMBER 9, 2024/as

RFA 861/2024 Page 1 of 8 pages