2024 (11) TMI 112 - HC - Indian Laws

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 ... Prayer by plaintiff for the judgment and decree to be passed in his favour - defendant has failed to apply for leave to defend the Suit within the period prescribed in Order XXXVII Rule 3(5) of the CPC - HELD THAT:- Order XXXVII Rule 3(5) of the CPC provides for the defendant to apply for leave to defend the Suit. It further provides that the leave to defend may be granted to the defendant unconditionally or upon such terms that may appear to be just to the Court. It further provides that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that the defendant has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous and vexatious. It further empowers the Court to direct the deposit of the admitted amount by the defendant, where the Court finds that a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him. The denial of leave to defend is not the rule but an exception. However, leave to defend may not be granted where the defendant has practically no defence and is unable to give out even a semblance of triable issues. Where the defendant raises triable issues indicating a fair or bona fide or reasonable defence, albeit not a positively good defence, the defendant would still be ordinarily entitled to unconditional leave to defend. Where the defendant raises triable issues, but it remains doubtful if the defendant is raising the same in good faith or there is a doubt about the genuineness of the issues, the Court may impose conditions both as to time or mode of trial, as well as payment into the Court or furnishing of a security by the defendant. Where the defence appears to be plausible but improbable, heightened conditions may be imposed as to the time or mode of trial as also of the payment into the Court or furnishing security or both - Where the defendant admits to a part of the claim of the plaintiff, leave to defend is not to be granted unless the amount so admitted is deposited by the defendant in the Court. The only defence of the defendants is that the said amount was repayable on an ‘as and when able to’ basis - the defendants in their applications seeking leave to defend have also stated that the amount was repayable to the plaintiff when Mr. Shivinder Mohan Singh would be released from custody. The learned senior counsel for the plaintiff has asserted that the same also happened about one and a half years back. The Court is, therefore, faced with the defence whereby the defendants admit that they are liable to repay the amount but claim that the said amount has not become repayable as of now and shall become repayable on a future date, which is uncertain and at the sole discretion of the defendants and only when the defendants are able to repay the same. In the present case, the liability to repay is admitted by the defendants. It is also admitted that they had given the cheques under their own signatures with the amounts filled in to the plaintiff, and the plaintiff has merely inserted a date on the said cheques - the defence raised by the defendants is completely moonshine, frivolous and vexatious and, in fact, the defendants have admitted to their liability owed to the plaintiff. The applications are hereby dismissed. 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.