P.R. Bora JUDGMENT
Anoop V. Mohta, J.
1. The Appellant-Original Defendant has filed the Appeal and prayed to quash and set aside impugned Judgment/order dated 16 August 2005 passed by the learned Single Judge in Summons for Judgment No. 1008 of 2003 in Summary Suit No. 2624 of 2003.
2. The Appellant and the Respondents formed and signed a partnership deed and purchased a membership card of NSEI Limited in the name of partnership firm i.e. "Money Mint".
3. During the year 1998-1999, disputes and differences arose between them. On 2 August 2000, they signed an arrangement. The claim and counter-claim made through the correspondences. On 1 August 2004, the Respondents filed the Suit for recovery/claim of Rs. 40 lakhs and has taken out Summons for Judgment. In the month of October 2004, the Appellant has taken out Notice of Motion No. 3021 of 2004 and raised the question of jurisdiction. On 22 December 2004, the Respondents filed reply in the Notice of Motion. On 18 June 2005, the Appellant filed his affidavit in reply of Summons for Judgment. On 16 August 2005, the learned Single Judge passed the impugned order and thereby directed to deposit full amount of Rs. 40 lakhs. Being aggrieved, the Appellant has filed the present Appeal.
4. The learned counsel appearing for the Appellant read and referred the following Judgments in support of his contentions.
"a) Emkay Exports, Mumbai & Anr. v. Madhusudan Shrikrishna MANU/MH/0547/2008 : 2008 (4) Mh. L.J. 843;
b) Siri Krishan Bhardwaj v. Manohar Lal Gupta & Anr. MANU/DE/0017/1977 : ILR (1977) Delhi 436
c) Lucky Electrical Stores, by Partner Mahendra Kumar Shah & Anr. v. Ramesh Steel House by Partner Babulal MANU/TN/0225/1988 : (1988) 1 MLJ 187
d) Nandipati Rami Reddy v. Nandipati Padma Reddy & Ors. : MANU/AP/0081/1978 : AIR 1978 AP 30
e) Vareed Jacob v. Sosamma Geevarghese & Ors. MANU/SC/0410/2004 : (2004) 6 SCC 378
f) IDBI Trusteeship Services Ltd. v. Hubtown Ltd. MANU/SC/1490/2016 : (2017) 1 SCC 568"
5. This Court (Coram:- Anoop V. Mohta,) in IAL Logistics India [A Division of IAL Container Line (India) Ltd. v. Quantum International MANU/MH/1271/2011 : 2011 (5) Mh.L.J. 931, while dealing with the scheme and object of Order 37 of the Code of Civil Procedure 1908, (CPC), has observed in paragraph No. 10 that:-
"10. The scheme and purpose of Order XXXVII of the Code of Civil Procedure (CPC) can be summarised as under:-
The purpose and the basic of summary suit:-
(a) A plaintiff, if chooses to invoke the provisions of Order XXXVII for recovery of amount, the basic obligations and elements as required need to be fulfilled. The summary suit so filed must fall within the four corner of Order XXXVII for getting judgment/decree summarily.
(b) As per Rule 227 of the Bombay High Court (Original Side) Rules, 1980, the plaintiff must take out an appropriate proceeding within six months once such Suit is instituted, though it is subject to condonation of delay, if case is made out.
(c) The object of Order XXXVII is to recover the crystallised dues, liquidated, admitted, acknowledged debt/monetary claim by a summary procedure, without long trial, principally based upon a written document executed in the course of business, in accordance with law. It is a supportive measure for recovery of unpaid debt/amount covering all the negotiable instruments as contemplated under the Negotiable Instruments Act, apart from a valid, written contract/receipt/acknowledgment. It may be an express term or an implied term, based upon facts and circumstances of the case, considering the practice, trade and usage of the commerce and the trade. This also covers apart from principal amount, express or implied terms of the interest.
The plaintiff's and defendant's respective obligations:
(d) A plaintiff having once instituted a summary suit is under obligation firstly, to serve the defendant, a summons for appearance by providing copy of plaint and annexures. The defendant, upon such service, needs to appear within 10 days from the date of the service either in person or through an Advocate. If the appearance is made, either in person or through the Advocate, the plaintiff is required to serve the summons for judgment on the given address.
(e) The defendant is entitled to file a reply and/or an application for grant of leave to defend the Suit, within 10 days of service of summons with the averments and the supporting documents entitling him leave to defend the Suit. Such application or affidavit reply shall be supported by an affidavit.
(f) If the defendant fail to enter appearance in spite of the service, the plaintiff's averments/allegation, if supported by due documents/material, shall be deemed to be admitted and entitled for a judgment/decree for the amount so prayed. The defendant though filed appearance but failed to file reply or defence or remained absent in spite of filing of service, the Court may pass judgment/decree as prayed in accordance with law.
The Court needs to exercise the discretion judicially:
(g) Though basic burden lies upon the plaintiff to prove and satisfy the Court that the claim so raised and prayed for decree falls within the ambit and scope of the summary procedure in question. Once the Court comes to a conclusion that plaintiff has made out a case for summons for judgment or the defendant has made out a case for unconditional or conditional leave, after considering the facts and circumstances of the case, need to exercise discretion in either way based upon the settled position of law.
(h) The defendant is able to demonstrate through the affidavit in defence and/or averments made in application/affidavit for leave to defend that the plaintiff has not made out a bona fide and clear case and on the contrary the defence so raised is bona fide reasonable and good defence and raises the plausible/triable issues the defendant is entitled to unconditional leave to defend.
(i) But, after the defence so raised by the defendant and the Court is satisfied that the defendant may at the trial able to establish a defence and/or there is material placed on record, though not fully supportive, the Court may grant conditional leave, directing the defendant to deposit the amount in the Court in full and/or in part and/or to furnish the security by possible permitted modes pending the trial.
The grant of Decree or Summons for Judgment with agreed interest:
(j) The Court, if, comes to a conclusion that there is no defence and/or it is sham, bogus, illusory and moonshine, the Court may refuse to grant leave to defend and pass/grant summons for judgment or decree as prayed by the plaintiff.
The Interest:
(k) The Court needs to consider the aspect of agreed rate of interest on the principal amount so claimed and the future interest also. The condition should be reasonable, practicable and not be onerous or burdensome:
The condition should be reasonable, practicable and not be onerous or burdensome:-
(l) It is also necessary for the Court while exercising a jurisdiction to see that while granting leave to defend, contention should not be unduly onerous that results into depriving and/or unable to defend the defence so raised. The Court, therefore, needs to exercise discretion cautiously and carefully while passing the conditional or any such order in summary suits."
6. The Apex Court, recently in IDBI Trusteeship Services Ltd. (Supra), has observed in paragraph No. 17 that:-
"17. Accordingly, the principles stated in paragraph 8 of Mechelec's case will now stand superseded, given the amendment of Order 37 Rule 3 and the binding decision of four judges in Milkhiram's case, 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."
7. The Apex Court in, State Bank of Hyderabad v. Rabo Bank MANU/SC/1094/2015 : (2015) 10 SCC 521 in paragraphs 17 and 18 has recorded as under, while granting unconditional leave to defend:-
"17. An analysis of the above principles makes it clear that in cases where the defendant has raised a triable issue or a reasonable defence, the defendant is entitled to unconditional leave to defend. Leave is granted to defend even in cases where the defendant upon disclosing a fact, though lacks the defence but makes a positive impression that at the trial the defence would be established to the plaintiff's claim. Only in the cases where the defence set up is illusory or sham or practically moonshine, is the plaintiff entitled to leave to sign judgment.
18. Insofar as the question of maintainability of the suit in question under Order 37 CPC is concerned, this Court has in Neebha Kapoori v. Jayantilal Khandwala MANU/SC/7090/2008 : (2008) 3 SCC 770 : (2008) 1 SCC (Civ) 929 observed that where the applicability of Order 37 itself is in question, grant of leave to defend may be permissible. The court before passing a decree is entitled to take into consideration the consequences therefor. The courts dealing with summary trials should act very carefully taking note of the interests of both the parties. Merely on the ground that the defendant may resort to prolonged litigation by putting forth untenable and frivolous defences, grant of leave to defend cannot be declined. At the same time, the court must ensure that the defendant raises a real issue and not a sham one. The court cannot reject the defence on the ground of implausibility or inconsistency. Before recording a finding of granting leave to defend, the Court should assess the facts and come to the conclusion that if the facts alleged by the defendant in the affidavit are established, there would be a good or even a plausible defence on those facts."
8. The above Judgments itself make position very clear that while exercising the jurisdiction and dealing with the rival contentions in such Summary Suits, the Court is required to consider, apart from the law so referred above, the facts and circumstances of the case, as that should be the base for passing conditional or unconditional order. Therefore, we are proceeding to deal with the merits of the matter, by keeping in mind the above position of law.
9. Admittedly, the contract is based upon a stated agreement dated 2 August 2000. It was necessary to comply with certain reciprocal obligations with clear terms that "the retirement is complete only after full payment is received". The payment needs to be made in two months from 2 August 2000. There was no clarification sought at any point of time. The Appellant, on non-compliance, for whatever may be the reason, has not acquired 100% control/ownership over the firm "Money Mint". The Respondents, therefore, could not have retired as partners in the partnership firm. The Appellant, admittedly, not paid the amount therefore, to say that 2 August 2000 document is admitted document and/or document sufficient to grant decree based upon the same, in our view, is unacceptable. The law, in this regard, is very clear basically in view of the scheme, purpose and object of the Summary Suit, as referred in the above Judgments.
10. It is necessary to note that even the important aspect of limitation, which is missing from the reasonings so given by the learned Single Judge while passing the conditional order. The Respondents/parties have not followed the conditions/respective obligations, therefore, ordering to deposit Rs. 40 lakhs, can be stated to be admitted and/or crystalized amount for the purpose of Summary Suit, as contemplated under the law. The triable issues have been raised and the defence, in no way, can be stated to be sham and bogus, and therefore, no case is made out of passing such conditional order of depositing Rs. 40 lakhs. There were no other liabilities and/or admitted claims, except and other than the claims revolving around the stated conditional document dated 2 August 2000.
11. There is a force in the contention that in clause 22 of the Deed of Reconstitution of Partnership agreement, there is a arbitration clause. The disputes and liabilities between the parties need to be adjudicated, based upon the partnership deed. Therefore, the arbitration clause in agreement dated 25 May 1994, ought to have been invoked and/or taken note of, to resolve the dispute between the parties.
12. Agreement dated 2 August 2000, makes the position very clear that subject to payment/compliances of the respective obligations, the settlement would be given effect to. This was, admittedly, not done and recorded even by the Division Bench of this Court on 19 November 2005, while staying the Judgment and order. The Judgments so cited are on law, need no further discussions. We are dealing with the facts in hand.
13. The willingness of one party after the lapse of period so prescribed, that itself, cannot be the reason to accept that settlement agreement dated 2 August 2000, is revived and/or still in existence. The Summary Suit, therefore so filed, based upon the agreement, cannot be stated to be the document and/or acknowledgement to pass such conditional order. It is wrong to observe that settlement agreement dated 2 August 2000, provides for liquidated sum, as due and payable by the original-Defendant to the original-Plaintiff. The Appellant has raised triable issues and therefore, required to be granted full opportunity in accordance with law, before passing such order to deposit the liquidated amount of Rs. 40 lakhs. The Plaintiffs-Respondents are not entitled to obtain decree for non-deposit. The Appellant has made out a case to interfere with the impugned portion of the order of directing to deposit the amount. The case is made out to grant unconditional leave to defend. The defence so raised by the Appellant, cannot be stated to be sham, bogus and/or false and/or with intent to delay the payment and/or to avoid the payment.
14. Resultantly, the Appellant is entitled for unconditional leave to defend the Suit. The Appellant-original Defendant to file written statement within thirty days from the date of receipt of copy of this order. The Summons for Judgment is disposed of accordingly.
15. Hence the following order:-
ORDER
"a) Appeal is allowed.
b) Impugned order dated 16 August 2005, is quashed and set aside to the extent of direction to deposit an amount of Rs. 40 lakhs within a period of four weeks.
c) Appellant is entitled for unconditional leave to defend the Suit.
d) The Appellant-Original Defendant, if required, to file written statement within thirty days from the receipt of copy of this order. Affidavit, list of documents to be filed within four weeks, thereafter. Inspection be made within four weeks, thereafter.
e) The Suit, if pending, be placed on the board of learned Judge, who is taking the commercial causes suits, as the same is transferred to the list of commercial causes.
f) In view of disposal of the Appeal itself nothing survives in the Notice of Motion and the same is also disposed of.
g) No costs."
16. This Judgment shall not take effect for six weeks from today, in the interest of justice.
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