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Aganall Traders Limited vs Shri Shyam Ahuja on 1 December, 1998

Delhi High Court
Aganall Traders Limited vs Shri Shyam Ahuja on 1 December, 1998
Equivalent citations: AIR 1999 Delhi 369
Author: D Bhandari
Bench: D Bhandari

ORDER

Dalveer Bhandari, J.

1.
The plaintiff M/s. Agnall Oil Traders Limited is incorporated under the Companies Act, 1956. The plaintiff is an authorised dealer for the sale of Maruti Vehicles and its spare parts. The defendant is also engaged in the business of trading and sale of automobile parts and allied products. The defendant had purchased goods from the plaintiff. Admittedly, all the purchases were made on credit by the defendant. It is alleged that as per the market usage and custom and defendant had agreed to pay interest at the rate of 22 per cent per annum on the unpaid purchase. The defendant issued cheques against the purchases but most of these cheques were dishonoured. The plaintiff has placed about 26 cheques on record which were given to him by the defendant and on presentation, all these cheques were dishonoured. The defendant had reconciled his account of purchases made and confirmed the debit balance. It is further alleged in the plaint that the defendant vide letter dated 8.8.1992 regretted or his failure to keep his commitmentregarding the repayments on account of his financial condition.

2. The defendant has issued cheques to the plaintiff to clear entire outstanding amount. The defendant had also signed a promissory note on 8.8.1992. In the said promissory note, the defendant agreed to pay Rs. 17,10,47.43 with interest at the rate of 22%.

3. It is alleged in the plaint that on 18.8.1992, the plaintiff and the defendant had arrived at an agreement by which the liability was admitted by the defendant and he gave post dated cheques to the plaintiff.

4. It is also mentioned in the agreement that in case the amount is not paid then the plaintiff would be at liberty to take appropriate legal action. When the payment was in fact not received despite a number of requests and reminders, then the plaintiff sent a notice on 2.1.1993. Even after receiving the legal notice, the amount was not paid by the defendant. Again on 10.1.1993, an agreement was arrived at between the plaintiff and the defendant in which the defendant had again confirmed the transaction with the plaintiff. It is further alleged in the plaint that a sum of Rs. 19,48,948.19 with interest at the rate of 22% per annum from the due date f payment under the respective bill was payable to the plaintiff. The defendant offered to pay the amount in installments by issuing fresh cheques. It is also alleged that by way of security for the sums acknowledged as payable the defendant offered to give a bank guarantee of Rs. 2 lakhs. A fresh agreement dated 3.2.1993 was executed and the defendant issued post dated cheques.

5. It is also alleged that when the plaintiff could not obtain the out-standing amount from the defendant, despite requests and reminders, the plaintiff was compelled to file a suit under Order xxxvII of the Code of civil Procedure against the defendant.

6. The suit was registered on 15.9.1993. The defendant had filed a leave to defend application (I.A. No. 138/94). In the application, it was stated that the suit under Order xxxvII CPC is not maintainable. It is not denied that the goods were purchased on credit by the defendant from the plaintiff. It is also mentioned that it was agreed to pay interest at the rate of only 18 per cent on the terms and conditions agreed and not on unpaid purchase, as alleged, in the affidavit. The defendant had agreed that the letter dated 8.8.1992 was drafted and got typed by the plaintiff and the defendant had signed it alongwith the promisory note dated 1.1.1992 and the agreement dated 18.8.1992. The defendant had mentioned in the leave to defend application that the defendant had withdrawn the amount by the cheque and paid cash amount to the plaintiff and he had paid Rs. 5 lakhs by 14.8.1992, but no receipt was given to the defendant. It is further mentioned that the last installment of the amount was paid on 16.11.1992. It is further submitted by the defendant that after paying the entire amount when the defendant demanded the post dated cheques from the plaintiff, the plaintiff company on one excuse or the other did not return the post dated cheques. The plaintiff had given an undertaking that these cheques shall not be presented to the bank for encashment but despite the undertaking these cheques were presented and were consequently dishonoured. The entire defense of the defendant is that he had paid the amount in cash to the plaintiff. The further case of the defendant is that he never received any receipt of these payments from the plaintiff.

7. A reply to the leave to defendant application has been filed on behalf of the plaintiff. Though it is mentioned in the preliminary objections that the leave to defend was not filed within the statutory period but this ground was not pressed during the course of the arguments. Therefore, I do not deem it necessary to adjudicate this aspect of the matter. It is also mentioned in the reply that the affidavit filed by the defendant is frivo-lous, vexatious and consequently liable to be rejected. The plaintiff specifically denied that the defendant had paid to the plaintiff company Rs. 5 lakhs or any amount in cash. According to the plaintiff this allegation of the defendant is entirely baseless and without any foundation. It is mentioned that in pursuance to the agreement dated 15.8.1992, executed between the plaintiff and the defendant post dated cheques were issued by the defendant in favour of the plaintiff in terms of the agreement. The amount which was received by the plaintiff for the months of August and September, 1992 of Rs. 24,607/- and Rs. 20,000/- were duly credited by the plaintiff in the statement of accounts. No other amount had been received by the plaintiff from the defendant during the month of August and Septem-ber, 1992 and even thereafter from the cheques which were issued in favour of the plaintiff. It is submitted that a mere averment, that the defendant had withdrawn Rs. 5 lakhs or any other amount from his bank accounts does not mean that the said amount was paid to the plaintiff. The further defense of the defendant is that he paid Rs. 5 lakhs without obtaining any receipt or receipts cannot be accepted according to the plaintiff. The plaintiff asserted that the defense of the defendant is totally without foundation particularly in view of the agreement between the parties and the promissory note. It is submitted on behalf of the plaintiff that this defense has been taken only to illegally withhold the legitimate amount of th plaintiff firm.

8. It is clearly mentioned in the reply that according to the agreement dated 3.2.1993, the defendant agreed to pay the interest at the rate of 22 per cent according to the custom, usage and the prevalent rate of interest at that time.

9. The learned counsel for the defendant has also placed reliance on Cosmos Builders Promoters (P) Ltd. & Another Vs. Mr. Rajesh Ahuja & Another; 66 (1997) Delhi Law Times 151 (DB). In this case the court granted conditional leave to defend. The facts of the said case have no application as far as facts of the case in hand are concerned.

10. The learned counsel for the defendant has placed reliance on the judgment of the Supreme Court in M/s. Mechanic Engineers & Manufacturers Vs. M/s. Basic Equipment Corporation; . Their Lordships of the Supreme Court have laid down that the following principles should be kept in view while considering the question of grating or refusing the leave to defend:

“a) 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.

b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defense although not a positively good defense the plaintiff is not entitled to unconditional leave to defend.

d) If the defendant disclose such facts as may be deemed sufficient to entitle him to defend that is to say, although the affidavit does not positively and immediately make it clear that he has a defense, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defense to the plaintiff’s claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the court may in its discretion impose conditions as to the time or mode of trial but not as to payment into court or furnishing security.

e) If the defendant has no defense or the defense set up is illusory or sham or practically moonshine then although ordinari-ly the plaintiff is entitled to leave to sign judgment, the court may protect the plaintiff by only allowing the defense to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defense.

11. This judgment has comprehensively laid down the circumstances in which the leave to defend be either granted or refused. If the principles as laid down by this judgment are applied to the facts of this case, the irresistible conclusion is that the defendant has failed to raise any triable issue in this case, The defense taken by the defendant by no stretch of imagination can be said to be fair, bona fide or reasonable. The defense which the defendant has set up is totally frivolous, false, illusory or sham or practically a moonshine.

12. On consideration of the totality of the fact and circumstances, the defendant’s application of leave of defendant is liable to be rejected. The transaction between the plaintiff and the defendant is purely a commercial transaction. The parties have evolved their own terms including the rate of interest and no inference by the court is warranted. Consequently, the plaintiff’s suit is liable to be decreed alongwith the interest at the agreed rate of 22 per cent (as per agreement) from the date of filing of the suit until realisation. The plaintiff is also entitled to costs from the defendant.

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