Defendants' applications for leave to defend dismissed after admitting liability but claiming repayment only when able

Delhi HC dismissed defendants' applications for leave to defend under Order XXXVII Rule 3(5) CPC. Defendants admitted liability to repay amount but claimed repayment was due "as and when able" or when a third party was released from custody. Court found defendants' defence frivolous and vexatious as they admitted liability and had provided signed cheques to plaintiff with only dates to be filled. Since defendants raised no substantial defence and admitted the debt, leave to defend was refused and applications dismissed.

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Issues Involved:

1. Application for judgment and decree under Order XXXVII Rule 3(6) of the CPC.
2. Application for leave to defend under Order XXXVII Rule 3(5) of the CPC.
3. Condonation of delay in filing the application for leave to defend.
4. Determination of the nature of the transaction between the plaintiff and the defendants.
5. Validity of the cheques issued by the defendants and the effect of any alleged material alteration.
6. Entitlement to unconditional leave to defend based on the defense raised by the defendants.
7. Entitlement to interest on the claimed amount.

Issue-wise Detailed Analysis:

1. Application for judgment and decree under Order XXXVII Rule 3(6) of the CPC:

The plaintiff filed an application under Order XXXVII Rule 3(6) of the CPC seeking a judgment and decree as the defendant failed to apply for leave to defend within the prescribed period. However, the defendant subsequently filed an application for leave to defend along with an application for condonation of delay, which was allowed, rendering the plaintiff's application infructuous but without prejudice to the plaintiff's rights in the suit.

2. Application for leave to defend under Order XXXVII Rule 3(5) of the CPC:

The defendants filed applications seeking leave to defend the suits, arguing that the loans were repayable only when they were able to do so and that no definite timelines were fixed. The court considered the principles laid down by the Supreme Court in B.L. Kashyap and Sons Limited v. JMS Steels and Power Corporation, emphasizing that leave to defend is generally granted unless the defense is frivolous or vexatious.

3. Condonation of delay in filing the application for leave to defend:

The court condoned the delay in filing the application for leave to defend, allowing the defendants' applications for condonation of delay based on the reasons stated and detailed submissions made by the parties.

4. Determination of the nature of the transaction between the plaintiff and the defendants:

The plaintiff claimed that the amounts given were loans repayable on demand, supported by cheques issued by the defendants. The defendants argued that the amounts were financial aid repayable on an "as and when able to" basis, influenced by their familial relationship and the extortion faced by Mrs. Aditi Singh. The court found the defense of the defendants to be moonshine, noting that the liability to repay was admitted by the defendants and that the repayment obligation could not be at the sole discretion of the defendants.

5. Validity of the cheques issued by the defendants and the effect of any alleged material alteration:

The defendants claimed that the cheques were undated and that the plaintiff's insertion of dates constituted a material alteration rendering them void under Section 87 of the NI Act. The court rejected this defense, citing legal precedents that allow the holder of a cheque to insert a date if the cheque was handed over signed but undated, as this does not constitute a material alteration.

6. Entitlement to unconditional leave to defend based on the defense raised by the defendants:

The court found that the defense raised by the defendants was frivolous and vexatious, as they admitted their liability to repay the amounts. The court emphasized that the denial of leave to defend is not the rule but an exception, and in this case, the defendants failed to raise any genuine triable issues.

7. Entitlement to interest on the claimed amount:

The plaintiff initially claimed interest at 18% per annum on the amounts due. However, during the proceedings, the plaintiff's senior counsel gave up the claim for interest, and the court decreed the suits in favor of the plaintiff for the principal amounts claimed, without interest.

Conclusion:

The court dismissed the applications for leave to defend, decreeing the suits in favor of the plaintiff for the amounts claimed, without interest, and entitled the plaintiff to the costs of the suits. The court directed the defendants to pay Rs. 6,42,76,712.33 in CS(OS) 232/2022 and Rs. 8,81,91,452 in CS(OS) 233/2022 to the plaintiff, and the suits were disposed of accordingly.

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