Rakesh Kumar Gupta vs Anil Kumar Gupta

Paramjeet Singh, J.—Instant civil revision has been filed under Article 227 of the Constitution of India read with Section 151 of the Code of Civil Procedure, 1908 (in short "the Code") for modifying the order dated 21.10.2011 (Annexure P-2) passed by learned Civil Judge (Jr. Divn.), Chandigarh whereby leave to defend has been granted subject to furnishing of security in court in the shape of FDR equal to suit amount. I have heard learned counsel for the parties and perused the record.

Learned counsel for the petitioner has contended that apparently the impugned order has been passed on consent of the parties, however, defendant never gave the said consent and made reference to the statement of the petitioner got recorded in the Court. The learned counsel has further contended that leave to defend has been allowed subject to conditions despite the fact that there are substantial debatable issues which can only be decided in a regular suit. The learned counsel has referred to various objections to the suit. Firstly, general power of attorney on the basis of which suit was filed, stood cancelled, thereafter fresh general power of attorney was executed in favour of another person. The plaintiff, being an NRI, cannot execute a power of attorney in India. The basis of the suit is a settlement deed allegedly executed between the parties. The said deed was allegedly executed in the police station and was under coercion and the same is under challenge in civil proceedings. The learned counsel has further contended that suit pertains to the rights and liabilities of the Company, as such the provisions of the Companies Act will apply. The learned counsel has further contended that the suit is barred under the Companies Act and the plaintiff is a Director of the concerned company, as such, substantial issues arise which need to be decided only in a regular suit, not in a summary manner. The learned counsel has further contended that although leave to defend has been granted, but the condition of furnishing security in the shape of FDR equal to suit amount could not have been imposed as the facts raise debatable issues for consideration.

Per contra, learned counsel for the respondent has contended that leave to defend has been granted, as the petitioner-defendant had made a request for the same. The impugned order is consent order and cannot be challenged. Once leave to defend has been granted on the consensus recorded by the plaintiff and the defendant, the defendant is estopped by his act and conduct from challenging the same. The learned counsel has further submitted that the application for leave to defend has not been decided on merit but it was decided merely on the consent of the parties.

I have considered the rival contentions of learned counsel for the parties.

Learned counsel for the respondent-plaintiff has failed to show that petitioner ever gave statement to grant leave subject to security. The alleged consent is unilateral. Admittedly, in the application seeking leave to defend various objections have been raised and they have not been decided on merits by learned Civil Judge (Jr. Divn.), Chandigarh. It is the case of the petitioner-defendant that he never gave consent, rather he was stressing that the application should be decided on merit. Grant of leave to defend subject to conditions in shape of furnishing security or payment in Court is contrary to the law laid down in Uma Shankar Kamal Narain and Another Vs. M.D. Overseas Ltd., , Neebha Kapoor Vs. Jayantilal Khandwala and Others, and Babbar Vision India Pvt. Ltd. Vs. Rama Vision Ltd.,

On the specific asking of Court, learned counsel for the parties have submitted that written statement has already been filed and the case is pending for plaintiff''s evidence. It appears that now proceedings have started. In view of above, this Court deems it fit and proper that the trial Court instead of demanding security which has not been furnished owing to stay granted by this Court vide order dated 03.01.2012 shall decide the application for leave to defend on merits. In view of law laid down in M/s Uma Shankar Kamal Narain & Anr. (supra) and Neebha Kapoor (supra), the Court should look into the pleas mentioned in application while deciding the application for leave to defend.

In view of above, the impugned order is set aside and the matter is remanded to trial Court with a direction to re-consider and decide the application for leave to defend on merits and pass an appropriate order thereon. The parties are directed to appear before the trial Court on the date fixed and thereafter the trial Court will pass the appropriate order within one month. Disposed of.