AI Structured Summary
Not yet generated for this judgment
Judgment
Kuldip Singh, J.—The Defendants No. 2 and 1 have filed OMP Nos. 263 and 284 of 2010 respectively for enlargement of time and seeking leave to defend the suit. The Plaintiff has filed the suit under Order 37 CPC for recovery of Rs. 1,19,50,000/- on account of acts of misfeasance, malfeasance and nonfeasance on the part of Defendants No. 1 to 3, who after having obtained the dealership of tractors and delivery of tractors from the Plaintiff-company issued a cheque No. 776305 for a sum of Rs. 94,00,000/- in favour of Plaintiff-company which was dishonoured and, therefore, the Plaintiff has filed the suit for recovery of Rs. 94,00,000/ - along with interest at the rate of 11% per annum till the institution of the suit and thereafter at the rate of 18% per annum till the realisation of the amount.
The Defendant No. 2 in OMP No. 263 of 2010 has stated that the summons of the suit was received on 5.5.2010 but he was suffering from angina and was under treatment. He was advised bed rest and was bed-ridden from 8.5.2010 to 17.5.2010 and, therefore, he could not contact his Counsel. After regaining normalcy, he contacted his local Counsel on 25.5.2010 and came to Shimla on 26.5.2010, prepared the application which was filed on 3.6.2010. On these grounds, the Defendant No. 2 has prayed for extension of time for filing the application for leave to defend the suit.
It has also been stated in the application that Defendant No. 2 was an employee of Defendant No. 1. The Defendant No. 3 was the President of Defendant No. 1. The Defendant No. 2 was not privy to the negotiations, at the relevant time he was only the Manager of Defendant No. 1.
The Defendant No. 1 had applied for the supply of tractor dealership from Plaintiff in January, 2006 which was given some time in March, 2006. A demand draft of Rs. 50,000/- was given to Plaintiff by Defendant No. 3. The Plaintiff thereafter got a blank cheque signed to be kept as security which would be returned to Defendant No. 1 during the course of business.
The Plaintiff has also filed criminal complaint u/s 138 of the Negotiable Instruments Act on the basis of the aforesaid cheque which is pending in the Court of learned Chief Judicial Magistrate, Chandigarh. The Defendant No. 2 has been suspended from service in January, 2009, he is innocent and has been implicated in the case fraudulently on the basis of concocted facts. The Plaintiff interpolated and fabricated and filled in the cheque after inserting date 27.11.2007 and the cheque was malafidely presented in the bank for encashment. The Plaintiff in order to create evidence issued legal notice on 24.12.2007 which was replied by Defendant No. 2 on 2.1.2008 denying the claim of Plaintiff. It was clarified that the cheque was issued as security.
The dealership could not run profitably. The models of the tractors manufactured by Plaintiff were not approved by the State of Himachal Pradesh as also department of transport. The fitness certificate to model 3069 was never given. The dealership business could not function profitably and Defendant No. 1 ran into financial losses. The Assistant Registrar of Co-operative Societies has been appointed administrator of Defendant No. 1 and as of today Defendant No. 1 is functioning through administrator. On these grounds, the Defendant No. 2 has sought extension of time for filing the application and grant leave to defend the suit.
The Defendant No. l has filed OMP No. 284 of 2010 and has stated that summons was received on 3.5.2010, Defendant No. 1 could not enter an appearance either in person or through pleader assuming that date fixed in the summons was 12.7.2010. On 17.6.2010 representative of the administrator appointed on 17.9.2009 u/s 37 of the HP. Co-operative Societies Act, 1968 by the Registrar, came to Shimla to attend another matter which was listed on that date and he brought alongwith the copy of summons received in the present suit, he was apprised that Defendant No. 1 had to enter an appearance either in person or through pleader within 10 days of the service of summons. In these circumstances, on 17.6.2010 the authorized person came to know that appearance had to be entered within 10 days from the receipt of summons. The application was prepared and filed on 18.6.2010.
It has been stated in the application that the suit has not been filed in accordance with Order 37 of the Code of Civil Procedure. The Defendant No. 1 had handed over blank cheque in the name of M/s Indo Farm Tractors & Motors Ltd. as security at the time of applying for the dealership. The Plaintiff taking advantage of the said blank cheque, filled in the amount itself and the date without any prior information to Defendant No. 1 and filed the suit. The cheque was issued as security to the Plaintiff with the clear instructions that the cheque was to be returned subsequently. The cheque was never returned which was blank with respect to the amount and the date. The Plaintiff has mis-utilised the aforesaid cheque and filed the suit. The Plaintiff has also filed criminal complaint u/s 138 of the Negotiable Instruments Act on the basis of alleged cheque and the proceedings are pending before the learned Chief Judicial Magistrate, Chandigarh.
The Plaintiff has filed the suit on concocted facts, at no point cheque No. 776305 amounting to Rs. 94,00,000/- was ever given to Plaintiff for alleged discharge of any legal debt/obligation. On these grounds, the Defendant No. 1 has prayed for extension of time for filing leave to defend the application and also for granting leave to defend the suit.
The Plaintiff has contested both the applications by filing reply. The stand taken by Defendants No. l and 2 for extension of time for leave to defend the suit has been denied. The Defendant No. 1 has filed the rejoinder in OMP No. 284 of 2010 and has reiterated its stand taken in the application.
I have heard the learned Counsel for the parties and have also gone through the record. Sub Rule (2) of Rule 1 of Order 37 provides that Order 37 applies to suit upon bills of exchange, hundies and promissory notes; (b) suits in which the Plaintiff seeks only to recover a debt or liquidated demand in money payable by the Defendant, with or without interest, arising,- (i) on a written contract; or (ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or (iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only. Rule 2 provides the particulars which are to be fulfilled by the Plaintiff at the time of presentation of plaint. Rule 3 provides the procedure for the appearance of the Defendant. Sub rule (1) of Rule 3 provides that the Plaintiff together with the summons under Rule 2, shall serve on the Defendant a copy of the plaint and annexures thereto and the Defendant may, at any time within ten days of such service, enter an appearance either in person or by pleader and shall file in Court an address for service of notices on him. Sub rule (3) of Rule 3 provides that on the day of entering the appearance, notice of such appearance shall be given by the Defendant to the Plaintiff''s pleader, or, the Plaintiff if he is appearing in person. As per sub rule (4) of Rule 3, on putting appearance by Defendant, the Plaintiff shall serve on the Defendant a summons for judgment in Form No. 4A in Appendix B or such other Form as may be prescribed from time to time, returnable not less than ten days from the date of service supported by an affidavit verifying the cause of action and the amount claimed and stating that in his belief there is no defence to the suit.
The sub rule (5) of Rule 3 provides that Defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court to be just. Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the Defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the Defendant is frivolous or vexatious. Sub-rule (7) provides that the Court may, for sufficient cause shown by the Defendant, excuse the delay of the Defendant in entering an appearance or in applying for leave to defend the suit.
Rule 7 of Order 37 provides that save as provided by this order, the procedure in suits hereunder shall be the same as the procedure in suits instituted in the ordinary manner. Sub rule (1) of Rule 14 of Order 7 provides that where a Plaintiff sues upon a document or relies upon document in his possession or power in support of his claim, he shall enter such documents in a list, and shall produce it in Court when the plaint is presented by him and shall, at the same time deliver the document and a copy thereof, to be filed with the plaint. The sub rule (3) further provides that a document which ought to be produced in Court by the Plaintiff when the plaint is presented, or to be entered in the list to be added or annexed to the plaint but is not produced or entered accordingly, shall not, without the leave of the Court, be received in evidence on his behalf at the hearing of the suit. The Plaintiff has not placed original cheque No. 776305 dated 27.11.2007 amounting to Rs. 94,00,000/- at the time of presentation of the plaint nor the Plaintiff has filed an application seeking leave of the Court to produce now the cheque No. 776305 dated 27.11.2007.
It has come on record that Registrar u/s 37 of the H.P. Co-operative Societies Act, 1968 has appointed administrator to run the affairs of the Defendant No. 1 but the suit has been instituted against Defendant No. 1 through its President Man Mohan Singh. It has been submitted on behalf of the Plaintiff that Defendant No. 1 vide letter dated 1.10.2009 wanted to know the interest and capital of the cheque valued Rs. 94,00,000/- dated 27.11.2007 issued by Defendant No. 1 for discharging the liability for purchasing the tractors, so that the payment of the cheque amount plus outstanding amount could be paid to the Plaintiff. It has been submitted that in view of letter dated 1.10.2009 the Defendant No. 1 has no defence against the claim of Plaintiff on the basis of cheque No. 776305 dated 27.11.2007.
The stand of Defendant No. 2 is that he was only an employee of Defendant No. 1 and he has nothing to do with the cheque No. 776305 dated 27.11.2007. He has stated that he replied on 2.1.2008 notice dated 24.12.2007 issued on behalf of the Plaintiff and denied his liability. It is common case of the Defendants No. 1 and 2 that the cheque No. 776305 was issued for security and not for purchasing the tractors and it was blank. It is also their case that cheque has been lateron filled in by the Plaintiff by inserting figure Rs. 94,00,000/- and date 27.11.2007:
The Defendant No. 1 has placed on record copy of letter dated 10.9.2007, addressed to the Plaintiff showing blank and without date security cheque No. 776305 of State Bank of Patiala, Main Branch, Nalagarh was submitted alongwith the said letter. The Defendant No. 1 has also placed on record the copy of blank cheque No. 776305 addressed to M/s Indo Farm Tractors and Motors Ltd.
The Defendants No. 1 and 2 had put in appearance not within ten days as provided in Sub-rule (1) of Rule 3 of Order 37 but they have prayed for excusing their delay in putting appearance and for granting leave to defend. After Defendants 1, 2 had put in appearance and filed applications for excusing delay and for leave to defend the suit, the Plaintiff has not served the Defendant summons for judgment supported by an affidavit verifying the cause of action and taking the plea that there is no defence available to the Defendants in the suit as per sub rule (4) of Rule3.
The Defendant No. 1 has stated that appearance could not be put in the Court within ten days on the receipt of summons on 3.5.2010 as the Defendant No. 1 was under the impression that appearance was to be put on 12.7.2010 which was written on the summons. The Defendant No. 1 on 17.6.2010 came to know that such appearance was to be put in within ten days from the date of service of summons when repre-. sentative of Defendant No. 1 came to Shimla in another matter. The Defendant No. 1 filed an application on 18.6.2010. The Defendant No. 2 was suffering, from angina and he has placed some documents on record. According to him, he came to Shimla on 26.5.2010 and at that time he came to know that the application was required to be filed seeking leave to defend and such application was filed on 3.6.2010. The Defendants No. 1 and 2 have shown sufficient cause for condonation of delay and accordingly the delay in putting appearance in response to summons by Defendants as well as for filing leave to defend applications, condoned.
In view of the material placed on record by Defendants No. 1, 2 and legal position, it cannot be said that at this stage Defendants No. 1, 2 have no defence to contest the suit. I am satisfied that Defendants 1, 2 have made out a case for leave to defend the suit, accordingly leave to defend the suit is granted to Defendants No. 1, 2. OMP No. 263 and OMP No. 284 of 2010 are allowed.