JUDGMENT
Pradeep Nandrajog, J.
1. Vide present petition under Section 115 of the Code of Civil Procedure petitioners have laid challenge to the order dated 04.02.2006 passed by the learned Additional District Judge, Delhi.
2. By and under the impugned order the learned Trial Court has dismissed an application under Order xxxvII Rule 3(5) CPC seeking leave to defend a recovery suit filed by the respondent company under Order xxxvII CPC.
3. Facts necessary to dispose of the present petition are that the respondent company filed a suit under Order xxxvII CPC against the petitioners for recovery of Rs. 7,15,965/-. Suit was based upon a lease agreement dated 14.04.99 entered into between the respondent company and petitioner No. 1 Major Kuldip Singh and a letter dated 30.05.01 written by petitioner No. 1 wherein he admitted his liability to pay to the respondent company.
4. Material averments in the plaint were that a lease agreement dated 14.08.95 was entered into between petitioner No. 2, M/s Ritu Cosmetics, a proprietorship concern of petitioner No. 1 and M/s Burlington Air Express India (P) Ltd, predecessor-in-interest of the respondent company. That vide lease agreement dated 14.08.95 petitioner No. 2 agreed to let out the plot bearing No. 107, Phase IV, Gurgaon, Haryana (hereinafter referred to as the plot) to M/s Burlington Air Express India (P) Ltd for a period of 22 months at a monthly rent of Rs. 1,56,250/-. That Clause 3(b) of the lease agreement dated 14.08.95 stipulated that M/s Burlington Air Express India (P) Ltd shall deposit a sum equal to 12 months rent i.e. Rs. 18,75,000/- with the petitioner No. 2 and that said amount/deposit shall be refunded by the petitioner No. 2 when M/s Burlington Air Express India (P) Ltd would deliver to it the vacant possession of the plot. That Clause 3(b) further stipulated that M/s Burlington Air Express India (P) Ltd shall deposit three months advance rent Rs. 4,68,750/- with the petitioner No. 2 which shall adjust the same towards the rent. Clause 3(n) required the petitioner No. 2 to refund the amount of security deposit and any unadjusted portion of the advance rent to the M/s Burlington Air Express India (P) Ltd on delivery of vacant possession of the plot. That accordingly M/s Burlington Air Express India (P) Ltd paid a sum of Rs. 23,43,750/- (Rs.18,75,000/- towards security deposit and Rs. 4,68,750/- towards advance rent) to the petitioner No. 2. That receipt dated 14.09.95 was duly executed by the petitioner No. 1 thereby acknowledging that he received security deposit in sum of Rs. 18,75,000/- from M/s Burlington Air Express India (P) Ltd.
5. It was further pleaded that on expiration of the period of lease agreement dated 14.08.95 a fresh lease agreement dated 14.04.99 was entered into between the petitioner No. 1 and the respondent company whereby petitioner No. 1 agreed to let out the plot to the respondent company for a further period of 22 months. That stipulations pertaining to security deposit and advance rent were same in both the agreements save and except that as per lease agreement dated 14.04.99 respondent company was required to deposit six months advance rent with the petitioner No. 1. That vide letter dated 13.11.00 respondent company gave a notice to the petitioner No. 1 as required in terms of Clause 3(m) of the lease agreement dated 14.04.99 intimating that it is desirous of terminating lease agreement dated 14.04.99. That on 07.02.01 respondent company delivered vacant possession of the plot to the petitioners. That on 30.05.01 petitioner No. 1 issued a letter to the respondent company thereby admitting that he received a sum of Rs. 23,43,750/- from the respondent company and that he owes a sum of Rs. 17,06,522/- (Rs.12,38,772/- towards security deposit and Rs. 4,68,750/- towards advance rent) to the respondent company. That pursuant to the letter dated 30.05.01 petitioner No. 1 paid a sum of Rs. 11,00,000/- to the respondent company but failed to make the balance payment of Rs. 6,06,750/-(Rs.1,38,000/- towards security deposit and Rs. 4,68,750/- towards advance rent).
6. In such circumstances respondent company had filed a suit under Order xxxvII CPC claiming a sum of Rs. 7,15,905/-(Rs.6,06,750/- towards principal and Rs. 1,09,215/- towards interest) from the petitioners.
7. Petitioners filed an application under Order xxxvII Rule 3(5) CPC seeking leave to defend.
8. In the application seeking leave to defend petitioners admitted having received a sum of Rs. 23,43,750/- from the respondent company and that they owe a sum of Rs. 6,06,750/- to the respondent company. However it was further pleaded that petitioners are entitled to appropriate the said sum of Rs. 6,06,750/-. Appropriation of said sum was sought on following two grounds:
I The instrument by means of which plot was let out by the petitioners to the respondent company was lease agreement dated 05.12.95 which was entered into between the petitioner No. 2 and M/s Burlington Air Express India (P) Ltd and not lease agreements dated 14.08.95 and 14.04.99 as claimed by the respondent company. That the lease agreements dated 14.08.95 and 14.04.99 have no legal sanctity. That as per the lease agreement dated 05.12.95 plot was let out for a period of five years and that the respondent company was required to deliver the vacant possession of the plot to the petitioners on or before 4.12.2000. That Clause 3(i) of the lease agreement dated 05.12.95 stipulated that in case M/s Burlington Air Express India (P) Ltd failed to deliver the vacant possession of the plot to the petitioners on or before 4.12.2000 petitioners shall be entitled to forfeit the entire security deposit. That Clause 3(i) further stipulated that the period for which M/s Burlington Air Express India (P) Ltd shall remain in possession of the plot after the stipulated date of delivery of possession of the plot to the petitioners it shall be liable to pay to the petitioners use and occupation charges/damages at the rate of double the agreed rent. That the respondent company delivered the vacant possession of the plot to the petitioners on 07.02.01 i.e. 2 months after the stipulated date. That thus as per Clause 3(i) of the lease agreement dated 05.12.95 petitioners were entitled to forfeit the entire security deposit and that the respondent company was liable to pay damages in Rs. 5,62,000/- on account of its overstay in the plot. That however as a gesture of goodwill petitioners decided to not to forfeit the security deposit.
II Respondent company was also liable to make a payment of Rs. 90,000/- to the petitioners on account of payment of outstanding electricity and water bills.
9. Therefore petitioners were entitled to recover a sum of Rs. 6,52,000/- (Rs.5,62,000/- towards damages and Rs. 90,000/- towards outstanding water and electricity bills) from the respondent company. Thus the suit filed by the respondent company is wholly misplaced for the reason petitioners did not owe any amount to the respondent company and it is the respondent company which owes a sum of Rs. 45,250/- to the petitioners.
10. After noting respective versions of the parties vide impugned order dated 04.02.06 the learned Trial Court refused to grant leave to defend to the petitioners and thus dismissed the application of the petitioners. The necessary consequence of the dismissal of the application was that the suit of the respondent company was decreed. A decree was passed in favor of the respondent company directing the petitioners to pay a sum of Rs. 7,15,965/- together with interest @ 9% per annum from the date of filing the suit till date of realization.
11. After considering catena of judicial pronouncements on the subject of Order xxxvII CPC following legal principles can be culled out:
I The question to be considered in applications under Order 37, Rule 3, Civil Procedure Code, is whether or not a friable issue is disclosed on affidavit or otherwise by the defendant. By friable issue is meant a plea which is at least plausible. The defendant must state what his defense is, and must, as a rule, bring something more before the Court to show that it has a bona fide defense and is not a mere attempt to gain time by getting leave to defend.
II If there is a friable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based or the uncertainty as to the amount actually due or where the alleged facts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross-examine his witnesses then leave to defend should not be denied.
III If the defendant satisfies the Court that he has a good defense to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend.
IV At the stage of granting leave to defend, the Courts can only consider whether the facts as alleged by the defendant, if true, afford a good defense and not whether they are true or not.
V Leave to defend is declined where the Court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defenses. The test is to see whether the defense raises a real issue and not a sham one, in the sense that if the facts alleged by the defendant are established there would be a good or even plausible defense on those facts.
VI If the defendant has no defense or the defense set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
12. In the backdrop of afore-noted legal principles, it has to be seen that whether the application seeking leave to defend filed by the petitioners discloses a bona fide dispute or not. In order to determine the same it is necessary to note certain annexures filed by the petitioners.
13. The first relevant annexure is the letter dated 30.05.01 written by the petitioner No. 1 to the respondent company.
14. As already noted in the said letter petitioner No. 1 admitted having received a sum of Rs. 23,43,750/- from the respondent company and that he owes a sum of Rs. 17,06,522/- to the respondent company.
15. The factum that the petitioners are entitled to recover any amount from the respondent company is conspicuously absent in the said letter.
16. The next relevant annexure is the legal notice dated 27.09.01 issued by the petitioner No. 1 and addressed to the counsel of the respondent company. The said legal notice was sent as a reply to the legal notice dated 30.08.01 issued by the counsel of the respondent company on behalf of the respondent company.
17. In the legal notice dated 27.09.01 petitioner No. 1 first stated that the instrument by means of which the plot was let out was the lease agreement dated 5.12.95. However petitioner No. 1 admitted having signed the lease agreement dated 14.04.99 but stated that same was signed by him on account of misrepresentations made by the official of the respondent company.
18. Petitioner No. 1 again admitted having received a sum of Rs. 23,43,750/- from the respondent company.
19. It was further stated that the respondent company had sub-let the plot to one Delphi/Opel which was in clear violation of the lease agreement dated 05.12.95. That HSIDC had imposed a fine upon the petitioners on account of such sub-letting. That the respondent company is liable to pay the amount of fine imposed by HSIDC.
20. It was next stated that the respondent company is also liable to make payments of outstanding water, electricity and telephone bills which of the period for which respondent company was in possession of the plot. An electricity bill in sum of Rs. 82,331/- was specifically mentioned.
21. It was lastly stated that the respondent company is liable to pay a sum of Rs. 2,00,000/- on account of damages caused by the respondent company to the plot.
22. The last relevant annexure is the application under Order VI Rule 17 CPC filed by the petitioners seeking to amend the application seeking leave to defend. Vide order dated 5.10.2005 said application was dismissed by the learned Trial Court.
23. In the application under Order VI Rule 17 CPC filed by them petitioners stated that they owe a sum of Rs. 13,056/- to the respondent company.
24. It was next stated in the application under Order VI Rule 17 CPC that the respondent company is liable to make a payment of Rs. 31,469/- on account of outstanding electricity bill.
25. A cumulative consideration of the afore-noted annexures reveals following facts:
I If the petitioners were entitled to recover any amount from the respondent company as claimed by them in their application seeking leave to defend then why did they not mention the same in the letter dated 30.05.01 issued by the petitioner No. 1 to the respondent company?
II The claims pertaining to fine imposed upon the petitioner No. 1 by HSIDC and damages caused by the respondent company to the plot raised by the petitioners in legal notice dated 27.09.01 were not included by the petitioners in their application seeking leave to defend.
III In the application under Order VI Rule 17 CPC petitioners stated that they owe a sum of Rs. 13,056/- to the respondent company while in the application seeking leave to defend it was stated that the respondent company owe a sum of Rs. 45,250/- to the petitioners.
IV In the application under Order VI Rule 1 7 CPC petitioners stated that the respondent company is liable to make a payment of Rs. 31,469/- on account of outstanding electricity bill while in the application seeking leave to defend it was stated that respondent company is liable to make a payment of Rs. 90,000/- towards outstanding electricity and water bills.
V In the application under Order VI Rule 17 CPC there was no mention of claims for fine imposed upon by HSIDC and damages caused by the respondent company to the plot.
26. In the present petition petitioners have once again contended that respondent company had sub-let the plot to Delphi/Opel due to which HSIDC had imposed a fine upon the petitioner No. 1. That the respondent company is liable to pay the amount of the fine. Petitioners have also filed a photocopied document issued by HSIDC and addressed to the petitioner No. 1 wherein HSIDC has raised a demand in sum of Rs. 5,66,177/-.
27. Noting the ipsi-dixit and ever changing stand of the petitioners with regard to claims pertaining to the fine imposed by HSIDC, damages caused by the respondent company to the plot and payment of outstanding electricity and water bills I find no meat in the defense of the petitioners that respondent company owed a sum to the petitioners on account of said three claims.
28. The only claim raised by the petitioners which is left is the claim for a sum of Rs. 5,62,000/- on account of overstay by the respondent company in the plot.
29. It is settled law that the stipulations which provide for penal damages in case of breach of a contract are not to be enforced by the courts and that notwithstanding penal stipulations the courts award reasonable compensation to an aggrieved party. (See Section 74, Indian Contract Act and judgments of the Supreme Court in the decisions reported as Maula Bux v. Union of India AIR 1975 SC 1955 and Fateh Chand v. Balkishan Das ). The defenses pertaining to levy of penal damages are prohibited in law.
30. Since defenses pertaining to levy of penal damages are prohibited in law, the petitioners were not justified in raising a claim in sum of Rs. 5,62,000/- on account of damages for overstay by the respondent company in the plot for the reason said damages were penal in nature.
31. In light of above discussion I have no hesitation in holding that the defense set up by the petitioners is illusory and merely an attempt to gain time.
32. In such circumstances learned Trial Court was justified in dismissing the application of the petitioners seeking leave to defend.
33. I find no merits in the instant petition.
34. Dismissed.
35. No costs.