TaxTMI 
TaxTMI 
2015 (10) TMI 2868
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....rtain disturbing and disconcerting facts. It is found that in many cases, which come up in this Court, though the cases are pleaded to have been filed as falling under Order XXXVII CPC, ex facie, the suits ought not to have been filed by these litigants under Order XXXVII CPC. Filing of suits as Order XXXVII suits, though the same are not covered under Order XXXVII CPC result in wastage of precious judicial time, and which in this case has stretched to about four years and around two dozen dates of hearings. It is high time that this unacceptable practice must be stopped. 3. What is Order XXXVII CPC and what are the suits which are filed under Order XXXVII CPC? Order XXXVII CPC was enacted as an exception to the normal procedure under our Constitution and Civil laws, viz of following the principles of natural justice that a suit has to be decided in accordance with law by allowing a defendant an automatic right to defend the suit, and once there are disputed questions of fact both the parties would lead evidence on the factual issues framed. Once there would be various factual issues which require adjudication and determination, an ordinary civil suit has to be filed and decided....
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....the written contract such as a loan agreement with interest arising therefrom because no repayments were made by the borrowers or the guarantors right from the very inception itself, then it could be said that the amounts directly arise under the written contracts, but once after the original loan transactions when historically the written documents are executed, but thereafter there are subsequent transactions of repayment, and hence the amount which is claimed is not the amount which directly arises from the written contract/loan agreements because the amounts which are claimed in the suit are wholly different amounts payable on account of the balance due at the foot of the account on account of transactions which are separated by various periods and running into various years, a suit in such a case is definitely not maintainable under Order XXXVII CPC and should not be filed under Order XXXVII CPC. 4(i). I have had an occasion to examine this aspect in three cases as under:- (i) M/s Associates India Financial Services (P) Ltd. Vs. M/s Atwal and Associates & Ors. CS(OS) No. 2109/2002 decided on 9.8.2012; MANU/DE/3871/2012; (ii) M/s. K&K Health Care Pvt. Ltd. ....
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....mount claimed in the suit of Rs. 44,83,209/- arises from a particular written agreement. In an Order 37 suit the amount claimed in the suit may be the principal amount plus interest arising therefrom, however, once again the plaint makes no reference to a specific particular principal amount which has been stated as a liquidated amount in a written agreement payable to the plaintiff, and the balance claimed in the suit is only interest arising thereafter. 4. The object of an Order 37 CPC suit is that on the basis of the documents specified therein the liability towards the plaintiff is admitted. Only when the liability which is admitted in the dishonoured instrument or in the written document containing a liquidated demand as payable to the plaintiff, suits can be filed under Order 37 CPC. Those suits claiming amounts which are only balances due at the foot of account cannot be treated as falling under Order 37 CPC because the suit claim is based on the account and the amount claimed is not a liquidated amount arising/payable to the plaintiff on an instrument on the limited types which are the subject matter of Order 37 CPC. Entries and statements of account have necessari....
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.....25" 3. Subsequently, on the appellant/defendant stating and detailing other payments, a fresh statement of account was filed by the respondent/plaintiff reflecting the position of bills and payments as under:- M/s K & K Health Care Pvt. Ltd. Ledger Account from 01.04.2005 to 7.11.2005 Date Particulars Debit Credit Balance 01.04.2005 Dr Opening Balance 9,54,722.81 9,54,722.81 11.04.2005 Cr Ch. No. 860348 100,000.00 2,112,065.25 30.05.2005 Cr Ch. No. 474952 200,000.00 1,912,065.25 06.06.2005 Dr Bill No. 06/015 72,126.91 1,098,976.63 09.06.2005 Cr Ch.No.474 974 100,000.00 1,812,065.25 16.06.2005 Dr Bill No. 06/018 73,199.07 1,72,175.70 23.06.2005 Dr Bill No. 06/031 72,126.91 1,026,849.72 29.06.2005 Cr Ch. No. 464018 100,000.00 1,712,065.25 30.06.2005 Cr Ch. No. 464025 100,000.00 1,612,065.25 30.06.2005 Dr Bill No. 06/059 73,199.07 1,245,374.77 22.07.2005 Cr Ch.No.464 062 100....
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....on a decision of learned Single Judge of this Court in the case of M/s. Lohmann Rausher Gmbh. Vs. M/s. Medisphere Marketing Pvt. Ltd.; 2005 II AD (Delhi) 604 to argue that the suit on the basis of invoices is maintainable under Order 37 CPC. Of course, I am bound by the decision of the learned Single Judge and therefore a suit on the basis of invoices can be said to be maintainable under Order 37 CPC, however, in the present case the suit is not based on the invoices only but the amount claimed in the suit is the balance due at the foot of a running account i.e. after giving adjustment/credit for certain payments made for the invoices/bills. The suit is therefore definitely not only on the basis of invoice amounts alone for the same to be covered under Order 37 CPC. Also, in my opinion, in an appropriate case this issue will have to be examined whether a suit under Order 37 CPC can be filed on the basis of invoices alleging the same to be 'written contracts containing a debt or liquidated demand'- the necessary requirement of Order 37 CPC. The whole purpose of the provision of Order 37 Rule 1 CPC entitling filing of the suit on a debt or liquidated demand was that there is an agree....
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....for the plaintiff that in the suits such as the present, where the amount due effectively arises from the balance due at the foot of the account, it cannot be said to be a liquidated amount arising from a written agreement. The suit amount has to be the liquidated amount arising from the written agreement and in cases where the balance due at the foot of account is claimed the same automatically does not become a part of original loan document which contains a totally different amount. On the pleaded basis the suit is not maintainable under Order 37 CPC. I have so held in two judgments, one in the case of M/s K & K Health Care Pvt. Ltd. Vs. M/s Pehachan Advertising in RFA 202/2011 decided on 23.1.2012 and another in M/s Associates India Financial Services (P) Ltd. Vs. M/s Atwal and Associates & ors in CS(OS) No. 2109/2002 and I.As therein for leave to defend decided on 9.8.2012. I have also observed that there is a gross wastage of judicial time where plaintiffs unnecessarily file suits under Order 37 CPC although quite clearly the same are not maintainable under Order 37 CPC because there is no such category in Order 37 CPC where suit can be filed on amounts stated in an agreement....
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....ment of bills by the appellant/defendant. The bills were raised by the respondent/plaintiff on the appellant/defendant on account of advertisements issued in newspapers by the respondent/plaintiff on behalf of the appellant/defendant. The suit which was filed under Order 37 CPC, claimed the amounts due under the bills which were stated to be 'written contracts containing liquidated demand', though simultaneously admitting that after the bills were raised various payments were made towards the bills. The details of bills and payments made, when first filed by the respondent/plaintiff, were as under:- "Accounts Statement of M/s K & K Health Care Pvt. Ltd. from 01.07.2005 to 15.11.2005 Date Particulars Amount (Dr) Amount (Cr) Balance (Dr) 15.06.2005 Balance B/F 32,372.25 30.07.2005 Bill No. 07/020 290,652.00 11.08.2005 Bill No. 08/010 66,376.00 13.08.2005 Bill No. 08/019 72,127.00 18.08.2005 Bill No. 08/022 72,127.00 25.08.2005 Bill No. 08/035 288,609.00 05.09.2005 Bill No. 09/003 ....
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....18.18 2,206,811.07 09.09.2005 Dr Bill No. 09/008 5,254.18 2,212,065.25 21.10.2005 Cr Ch.No.527 737 4,632.00 1,248,356.25 24.10.2005 Cr Ch.No.527 732 58,521.00 1,189,835.25 27.10.2005 Cr Ch.No.527 734 63,591.00 1,126,244.25 27.10.2005 Cr Ch.No.522 233 63,591.00 1,062,653.25 30.10.2005 Cr Ch.No.527 735 63,591.00 999,062.25 07.11.2005 Cr Ch.No.527 736 87,652.00 911,410.25 10.11.2005 Cr Ch.No.527 738 254,453.00 656,957.25 Total Outstanding Rs. 656,957.25" This latter statement of account is a part of the statement of account running into a total number of eight pages. This second statement of account, in addition to the two payments reflected in the first statement of account, admitted and reflected as many as five other payments. The fact that payments have been made as reflected in aforesaid two statements of account is not in dispute between the parties. The suit really therefore is a suit for the balance due at the foot of the account and is not one which is on....
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....nal leave to defend must be sustained. Merely because a plaintiff/respondent feels it has a strong case on merits cannot mean that the suit can be filed under Order 37 unless the mandatory requirement of basing the suit on one of the four requirements of Order 37 Rule 1 sub Rule 2 is complied with. If the suit is not maintainable under Order 37, there does not arise an issue of any conditional leave to defend as was granted by the trial Court. (underlining added) 5. Counsel for the plaintiff has failed to point out any written agreement containing the specific amount claimed in the suit and which is the liquidated amount and which is stated in the written agreement. Merely because there is a written agreement way back of the year 2002, cannot mean that the suit amount which is not stated in the said agreement would also become a liquidated amount in the suit filed under Order 37 CPC. 6. During the course of hearing, I put it to the counsel for the plaintiff as to whether in the light of facts which have emerged should the suit at all be pressed as one under Order 37 CPC, and the counsel insists that the suit lies under Order 37 CPC. In view of ab....
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....this Court is invited so as to know what is the amount due on 25.9.2005, not to the averments in the plaint, but to the documents filed with the plaint and of which documents there is no reference in the plaint so that this Court should read the said document to know the amount due as on the date of the Compromise Deed dated 25.9.2005. The document which is referred to is a statement of account showing that as on 25.9.2005, a sum of Rs. 1,30,00,000/- was due to the plaintiff ie admittedly the amount said to be due on 25.9.2005 is different than the original loan amount of Rs. 1,72,88,100/-. It may be noted that when the Compromise Deed dated 25.9.2005 was entered into, the name of the principal borrower company had changed from Starr Hospital to M/s Gold Star Hospital & Research Centre Ltd. (ii) The next averments in the plaint with respect to the amount due to the plaintiff, are found in para 11 of the plaint, and as per this para 11, the plaintiff pleads that as per the statements of accounts of 'two agreements', a total sum of Rs. 1,19,58,688.94 is due to the plaintiff including TDS dues and which total comprises of two amounts of Rs. 1,13,29,626.94 plus Rs. 6,29,062/-. How t....
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....een made above, I am reproducing paras 4, 6 and 11 of the plaint and these paras read as under:- "4. Based on defendants assurances and representations of defendants, the plaintiff company entered into Equipment Master Security & Loan Agreements, bearing nos.W10827 (A120052), W10867 (A120086), W10866 (A120085), W10918 (A120190), W10965 (A120240), W10968 (A120238, W11120 (A120440), W11196 (A120528) with Starr Hospital & Research Centre Ltd. For nos. W10827 (A120052), W10867 (A120086), W10866 (A120085), W10965 (A120240) and W11120 (A120440) a single agreement booklet dated 25-Mar-2003 was executed between the parties. Further, for No. W10968 (A120238) agreement dated 27-Sep-2003, for No. W10918 (A120190) agreement dated 06-Aug-2003 and for No. W11196 (A120528) agreement dated 28-Mar-2004 were executed between the parties. In the aforesaid manner total of four Loan Agreements were entered into with Starr Hospital & Research Centre Ltd. The said Loan Agreements were concluded and executed in New Delhi. Under the Loan Agreements a total sum of Rs. 1,72,88,100/- (Rupees One Crore Seventy Two Lacs Eighty Eight Thousand and One Hundred Only) was financed by the Plaintiff Company t....
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....s No. W12042 was towards the repayment schedule of Loan Agreement Nos.W10827, W10867, W10866, W10918, W10965, W11120, W11196, and Agreement No. W12043 was towards the repayment schedule of Loan Agreement No. W10968. Gold Star Hospital and Research Centre Pvt. Ltd., agreed to pay the Outstanding amount in accordance with the fresh repayment schedules. As per the repayment schedules, the loans were to be repaid in instalments uptill 25.03.2010. Under the fresh repayment schedule also Gold Star Hospital & Research Centre Ltd. was to deduct TDS from the monthly instalment amount and provide TDS Certificates to the Plaintiff. xxxxx xxxxx 11. That when the Defendants failed to pay the outstanding amount even after repeated follow ups by the officers of the Plaintiff Company, the Plaintiff was constrained to issue a notice of demand dated 13.07.2011 issued on 19.07.2011 to the Defendants and Spatica Super Speciality Hospitals Ltd. (Principal Borrower) through registered post. The notice addressed to Defendant Nos.1 and 4 have been received back with the remarks "Left". The address on which the notice was sent is the address given in the Personal Guarantee signed by the Defe....
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.... arises as emerging/flowing directly from the written instrument which is the subject matter of the Order XXXVII suit, and, a civil court cannot under Order XXXVII CPC be called upon to look at various documents and various statements of accounts, spread over periods running into years, so as to determine how the amount due in the suit claimed is arrived at, and which amount is admittedly different from the amount contained in the written document(s). (ii) The plaint in the present suit when it refers to the amount which is claimed in the suit of Rs. 1,06,89,531.40 does not make averments and refer to any specific document being the written contract between the parties containing this specific liquidated amount as due and payable by the defendants to the plaintiff. (iii) Not only there is no cause of action pleaded in the plaint with respect to the amount of Rs. 1,06,89,531.40, even the figure of Rs. 1,19,58,688.94 which is referred to in para 11 of the plaint is not supported by any written document as a liquidated amount being due and payable by the defendants to the plaintiff. Also, as stated above, not only there is no written contract containing this liquidat....
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....ndividual guarantees executed by defendant nos.2 to 4. The statement of account merely sets out the outstanding amounts along with overdue interest computed by the plaintiff. 22. Counsel for the defendant fairly admits that the entries contained in the statement of account filed by the plaintiff have not been questioned in the defendant's present application. I any event, in my view, mere general denial of the statement of account filed by the plaintiff is not sufficient, and the defendants ought to have raised specific pleas in relation to the various entries which go to make the statement of account, if according to them, any, or all of them were incorrect. 23. In my view, the defences as raised by the defendants are moonshine and frivolous and do not raise any triable issue. No useful purpose would be served in granting leave to the defendants to defend the suit, since the defences raised, even if proceeded further for examination in a trial, cannot succeed as they are misconceived and untenable in law. Accordingly, I dismiss this application." 13. In my opinion, the judgment in the case of GE Capital Services India (supra) (2007's case) relied upon by the p....
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....ccount was admitted and which is not the position in the present case. 14. It is settled law that a judgment of a court is not to be read like as a statute. Even a change of a single fact can make a difference to the judgment to be delivered in a particular case and this is so stated by the Constitution Bench of the Supreme Court in the judgment in the case of Padma Sundara Rao (Dead) and Others Vs. State of T.N. and Others, (2002) 3 SCC 533. Para 9 of this judgment is relevant and which reads as under:- "9. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. There is always peril in treating the words of a speech or judgment as though they are words in a legislative enactment, and it is to be remembered that judicial utterances are made in the setting of the facts of a particular case, said Lord Morris in Herrington v.British Railways Board; (1972) 2 WLR 537. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases." 15. This is a suit of the year 2011. For around four years valu....