JUDGMENT
Pradeep Nandrajog, J.
1. By the present application under Order 47 Rule 1 CPC, plaintiff seeks review of the order dated 11.2.2005 by which order IA. No. 4016/03 filed defendant No. 3 under Order 37 Rule 3(5) CPC was disposed of. Defendant No. 3 was granted unconditional leave to defend.
2. Review is principally sought on the ground that the plaintiff did not get an opportunity to present its case for the reason when IA. No. 4016/03 came up for hearing on 4.2.2005, counsel for defendant No. 3 made a request for an adjournment. Suit being of the year 1998, adjournment was declined. Defendant No. 3 was directed to file written submissions within three days. Counsel for the plaintiff was given two days time to respond thereto. IA. No. 4016/03 was reserved for orders. No written submissions being received from either party, this court went through the pleadings of the parties on its own and vide order dated 11.2.2005 disposed of IA. No. 4016/03. It is stated in the present application that the plaintiff was awaiting written submissions from the defendants and for said reason, plaintiff did not file its written submissions.
3. On 18.5.2005, I heard the parties on the issue of leave to defend in the context whether order dated 1.2.2005 needs to be reviewed/recalled.
4. Suit seeks a summary judgment against the defendants. As per the averments made in the plaint, defendant No. 1 is a company registered under the Companies Act. Defendant No. 2 is its Managing Director and defendant No. 3 is its Director. As per the plaint, defendants 2 and 3 secured credit facilities from the plaintiff on behalf of defendant No. 1. Material used to be lifted from the stockyard of the plaintiff. 22 cheques were issues totalling Rs. 2,07,95,253/-. Cheques were issued on behalf of defendant No. 1 under the signatures of defendants 2 and 3. Cheques were dishonoured. Principle amount payable is stated to be the sum covered by said 22 cheques i.e. Rs. 2,07,95,253/-. Interest @ 27% per annum calculated from 22.7.1998 till date of suit is stated to be Rs. 28,07,347/-. Suit, therefore, claims a decree in the sum of Rs. 2,36,02,600/- together with interest @ 27% per annum.
5. While allowing IA.4016/03, on reading of the plaint I had noted that there was no averment in the plaint that defendant No. 3 stood as a guarantor. I had read the plaint and held that a meaningful reading of the plaint shows that liability was being fastened on defendant No. 3 because he was a Director of defendant No. 1. That defendant No. 3 had signed some cheques from the account of defendant No. 1 would not make him personally liable in a civil action for recovery of the amount from defendant No. 1.
6. I was wrong in my observation pertaining to there being no averment against defendant No. 3 as a guarantor for the reason, as point out at the hearing, in para 8 of the plaint it is stated that defendant No. 3 as well as defendant No. 2 were guarantors.
7. Reason why said averment of the plaintiff was overlooked is that the plaintiff has pleaded cause of action only on the cheques and had otherwise made averments in the plaint which are far from satisfactory. Averments made in paras 3 to 9 of the plaint are relevant and may be noted :
“3. The defendant No. 2 is the Managing Director and defendant No. 3 is the Director of defendant No. 1 company respectively and had sought and secured credit facilities on behalf of defendant No. 1 and in their personal capacities from the plaintiff in respect of the dues or amounts payable to the plaintiff for the supply of various types of steel materials from time to time. The plaintiff supply different types of steel materials from time to time either by issuing offer letters and delivery orders or through railway receipts. The defendant Nos. 2 and 3 are looking after the business of defendant No. 1.
4. The defendant No. 2 and 3 on behalf of defendant No. 1 used to lift materials from the stockyard of the plaintiff in Ballavgarh as well as by district dispatch from the steel plants on credit by issuing blank undated cheques along with the letter of authorities issued by the defendant Nos. 2 and 3 on behalf of defendant No. 1 in favor of the plaintiff to enable the plaintiff to present the cheque after putting the dates and the invoice value in respect of the goods/materials delivered to defendant No. 1 by the plaintiff. These cheques were to be presented after the expiry of the credit period granted by the plaintiff in favor of defendant No. 1. The defendants No. 2 and 3 on behalf of defendant No. 1 had issued 22 cheques and the particulars are given herein below:-
x x x x x
(particulars of cheques have been given)
x x x x x
The above mentioned cheques were of Punjab National Bank, Nehru Place, Branch, New Delhi-19 issued by defendant No. 2 and 3 on behalf of defendant No. 1. The plaintiff deposited these 22 cheques issued on behalf of the defendant No. 1 on different dates after an expiry of the credit facility extended to defendant No. 1 by the plaintiff to their banker State Bank of India. All the cheques presented by the plaintiff were dishonoured with the remarks “exceeds in arrangements.
5. The plaintiff thereafter issued 22 notices under Section 138 of the Negotiable Instruments Act,1881 (As amended) to all the defendants demanding payments of total amount of Rs. 2,07,95,253/- within 15 days from the date of receipt of the said notices. The defendants have received this notice but did not make any payment to the plaintiff till date.
6. The defendants are liable to pay of the price of the steel materials sold and delivered by the plaintiff for which no payment was received due to dishonouring all the cheques issued by defendant No. 2 & 3 on behalf of defendant No. 1 and as such the plaintiff is entitled to claim interest @ 27% along with the principal amount due to the plaintiff from the defendants in the present suit. The particulars of the claim of the plaintiff are as under :
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DESCRIPTION AMOUNT
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(i) Principal amount Rs.2,07,95,253
(ii) Interest on amount Rs. 28,07,247
@ 27% calculated up
to 22-7-1998.
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Total : Rs.2,36,02,600
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7. The defendants No. 2 & 3 are also personally liable for the aforesaid amount payable to the plaintiff for the goods received on behalf of defendant No. 1. All these defendants are liable to pay Rs. 2,236,02,600/- (Rupees two crores thirty six lakhs two thousand six hundred only) including interest due to payable by the defendant No. 1 since they have failed to pay the amount despite demand for such payment made by the plaintiff.
8. The plaintiff is entitled to recover the aforesaid amount of Rs. 2,36,02,600/- (Rupees two crores thirty six lakhs two thousand six hundred only) with interest @ 27% from the defendant No. 2 & 3 being the guarantors of the principal debtor that is defendant No. 1. The defendants No. 2 & 3 had misappropriated the said amount for their personal benefit and use and as such they are liable to pay the aforesaid amount with 27% interest. The plaintiff is also entitled to future interest @ 27% till the date of payment.
9. The cause of action for the present suit arose when the materials were lifted by the defendants on the date of presentation of these 22 cheques on 21.3.98, 23.3.98, 24.3.98, 30.3.98, 3.4.98, 6.4.98, 11.4.98. The cause of action again arose when the plaintiff issued legal notices to the defendants under Section 138 of the Negotiable Instruments Act,1881 (as amended) after the said cheques were dishonoured on their presentation and again when the defendants failed to pay the entire amount with interest even after services of notices under Section 138 of the Negotiable Instruments Act,1881 (as amended).”
8. A perusal of paras 3 to 9 of the plaint would reveal that in para 3 of the plaint, plaintiff states that defendants 2 and 3 in their personal capacity obtained credit facilities for defendant No. 1. In para 4, plaintiff states that defendants 2 and 3 used to lift material and had issued 22 cheques. In para 5 of the plaint it is stated that the said cheques bounced. In para 6 it is averred that defendants are liable to pay the price of the material received. In para 7, it is averred that defendants 2 and 3 are personally liable for the aforesaid amount. It is only in para 8 it is stated that defendants 2 and 3 being the guarantors of defendant No. 1 are liable. The cause of action pleaded in para 9 is the date when cheques were dishonoured.
9. No particulars of guarantee signed by defendant No. 3 has been set out in the plaint. There is no averment that defendant No. 3 was called upon to pay the amount as a guarantor on default of payment by defendant No. 1.
10. It is trite that if action is founded against a defendant on a cause which emanates from a written document, particulars of the documents have to be stated in the plaint. To constitute a complete cause of action against a guarantor, in the least, following pleadings have to be made in the plaint :
(a) That in respect of a transaction with the principle debtor, defendant stood as a guarantor. Facts showing as to how defendants stood as a guarantor have to be pleaded.
(b) That the principle debtor defaulted in making payment.
(c) That under the deed of guarantee/guarantee bond, guarantor was called upon to make the payment and he did not pay.
(d) That liability of guarantor is co-extensive as that of the principle debtor.
11. Plaint lacks assertions as afore-noted.
12. Be that as it may, even the guarantee bond was not filed along with the plaint. Further, while pleading cause of action, qua defendant No. 1 cause of action pleaded had to be that cheques issued by the said defendant bounced. This cause of action has been pleaded. Qua defendant No. 3, while pleading cause of action, it was required to be pleaded that defendant No. 3 is liable to pay under the guarantee bond. It was required to be pleaded that plaintiff called upon defendant No. 3 to honour the obligation under the guarantee bond and that in spite of service of notice, defendant No. 3 failed to discharge his legal obligation. None has been pleaded.
13. While seeking leave to defend, defendant No. 3 has averred that he resigned from the Directorship of defendant No. 1 on 2.11.1995 while the transaction took place in the year 1997-98. Certified copy of Form-32 from the record of the Registrar of Companies dated 22.1.1995 has been filed. Defendant No. 3 has denied his signatures on any cheque. Defendant No. 3 has further denied having executed any guarantee bond. Defendant No. 3 has denied receipt of any goods on behalf of defendant No. 1. Defendant No. 3 has denied any control over the management of defendant No. 1 post 1995.
14. In reply to application of defendant No. 3 seeking leave to defend, plaintiff has averred that defendant No. 3 had executed a personal guarantee bond dated 9.5.1996. A true typed copy of the guarantee bond has been filed.
15. While granting leave to defend to defendant No. 3, I had held the said defendant to be entitled to leave to defend on two grounds. First being that the plaint does not bring out personal liability of defendant No. 3. The second was that interest has been claimed @ 27% per annum for the pre-suit period as also pendente-lite. Suit being based on a negotiable instrument i.e. cheques, I had held that statutory interest prescribed under the Negotiable Instrument Act is the maximum which could be claimed.
16. Under Clause (b) of sub-rule (1) of Rule 2 of Order 37 CPC, a plaint seeking summary judgment must contain an averment that no relief which does not fall within the ambit of the rule has been claimed in the plaint. In para 17 of the plaint, plaintiff has made said averment. However, said claim is incorrect for the reason, pre-suit interest @ 27% per annum has been claimed.
17. Suit is based on 22 dishonoured cheques. No document has been relied by the plaintiff, much less shown during arguments, which contains a written acknowledgment of the defendants that defendants would be liable to pay interest @ 27% per annum. It is obvious that the suit claims a relief which falls beyond the scope of Order 37 CPC in so far it relates to recovery of interest.
18. Original guarantee bond has not been filed. Defendant has denied having executed any guarantee bond. Defendant has filed certified copy of Form 32. Defendant would, therefore, be entitled to a defense entitling the defendant to show that he had resigned as a Director of defendant No. 1 in the year 1995 and had no concern with the management of said defendant in the year 1997-98. Defendant No. 3 would be entitled to a defense to establish that he had not signed the cheques in question.
19. Though for different reasons, defendant No. 3 would still be entitled to leave to defend.
20. IA. No. 2157/05 is accordingly dismissed.
CS(OS) 2191/98
Defendant No. 3 has filed written statement. Replication be filed within six weeks.
Suit be listed for further proceedings on 22.8.2005.