V.S. Aggarwal, J.
1. M/s. Airfreight Limited (hereinafter described as “the plaintiff”) has filed the present suit for recovery of Rs. 8,25,000/-, invoking Order xxxvII of the Code of Civil Procedure.
2. Some of the basic facts relevant for purposes of the present order are; that the plaintiff is engaged in the business of foreign freight forwarding and custom house agents and other services, such as travel/tours and courier services. DHL Worldwide Express is one of the divisions exclusively dealing with the courier service. Defendant is an ex-employee of the plaintiff. He had approached the plaintiff to accept him as one of its regular shippers. Defendant became entitled to most competitive rates available in the market. The defendant was required to furnish a bank guarantee for a sum of Rs. 1.3 lakhs. He also created a cash deposit of Rs. 1.00 lakh with the plaintiff as security. On 15.5.1995 the defendant desired to become a wholesaler of the plaintiff to use net-work of the plaintiff conceded the request of the defendant to become a wholesaler of the plaintiff, keeping in their long association.
3. The defendant started availing of the services as a wholesaler in a big way. Considering the volume of services availed of by the defendant, the plaintiff called upon the defendant to reduce the oral agreement into writing. It was executed on 8.1.1996. The defendant, on the pretext of furnishing the bank guarantee of Rs. 2.00 lakhs, made the plaintiff to return the existing bank guarantee of Rs. 1.3 lakhs. The defendant got the bank guarantee of Rs. 1.3 lakhs encashed. It is alleged that the amount claimed was due. A meeting was organized on 3.10.1996, in which all the senior officers of the plaintiff company attended. The defendant admitted his liability to a sum of Rs. 8,49,223/- and agreed to pay in the monthly Installments of Rs. 25,000/-. The defendant had given two Installments and the balance amount is stated to be due. Hence the present suit.
4. The defendant has preferred an application under Order xxxvII of the Code of Civil Procedure for grant of leave to defend the suit. It is alleged that the suit of the plaintiff is based on the agreement of 8.1.1996 whereas the dealings had come to an end in December 1995. Therefore, the civil suit is not maintainable. Furthermore, it is claimed that due to sudden withdrawal of the load of the courier by the plaintiff in December 1995, the defendant suffered a great loss. Some of the customers of the defendant, who had not been paid the due amount due to sudden closure of DHL, were Trans Asia Express (P) Limited Rs. 3,35,000, Adnois Exports Rs. 1,10,000/-, Runway Couriers Rs. 34,000/-. The business of the defendant was closed due to the illegal act of the plaintiff and, therefore, nothing is due. So far as the document of 3.10.1996 is concerned, the defendant denied that he had attended the meeting and stated that the signatures are procured by the plaintiff and are manufactured one. He denies that there is any agreement to pay the said amount in Installments of Rs. 25,000/- per month.
5. The short question that comes up for consideration in the facts, therefore, is as to whether the defendant is entitled to permission to contest or not. One of the earlier decisions of the Supreme Court on the subject is that of SANTOSH KUMAR v. BHAI MOOL SINGH . The Supreme Court held that though the Court is given a discretion by Order xxxvII, still it must be exercised along the judicial lines. Wherever the defense raises friable issue leave should be granted and when that the case, it must be given unconditionally, otherwise the leave may be illusory. If the court is of the opinion that the defense is not bonafide then it can impose conditions.
6. In this regard, the decision of the Supreme Court in the case of MECHALEC ENGINEERS & v. BASIC EQUIPMENT CORPORATION can not be lost sight of. The Supreme Court held that if the defendant has no defense or it is illusory or sham, in that event the plaintiff is entitled to a decree. The court may still protect the plaintiff by allowing the defense to proceed if the amount is paid in court. Other conditions had also been provided that if it is a friable issue, permission to contest should be granted.
7. This Court, in the case of INDERJIT SEHDEV v. RAM SINGH provided the same principles and in paragraph 7 held:
The defense may seem to be illusory or sham or practically moonshine still the defendant can be granted leave on terms. I agree with Mr. Bhargava, learned counsel for the defendant, that on dishonouring of the cheque no reply to the notice sent by the plaintiff had been given by the defendant. The cheque was obviously dishonoured as the defendant did not have sufficient funds in the bank and that is why the endorsement on the memo by the bank is, “Referred to drawer.” Nevertheless, the defense being put forth that the amount of the cheque was on account and the writing of July 15, 1978 is a proof of the said fact may seem to be illusory but the defendant in the facts of the present case ought to be enabled to prove it.
8. Reverting back to facts of the present case, it is abundantly clear that though the plaintiff specifically asserts that the amount claimed was due and in addition to that there was an agreement dated 3.10.1996 arrived at duly signed by the defendant that the amount shall be paid in Installments of Rs. 25,000/- per month. The defendant, on the contrary totally denies having taken part in any such meeting or having signed. He states that the signatures are procured.
9. Keeping in view the said fact, it flows from the above that friable issues are drawn in this regard. At this stage, it is not possible to describe the defense to be sham, bogus or moonshine.
10. As a consequence of the above, permission to contest is granted. The defendant is directed to file the written statement within four weeks. Replication, if any, may be filed within the next four weeks.
Suit No. 475/1998
11. List it on 24.2.2002 for framing of issues.