Whitefiled Motors (P) Ltd vs Sanjay Kriplani & Ors.

The present Chamber Appeal has been filed by the Defendants No.1 & 2 challenging the Order dated 28.05.2025, passed by the learned Joint Registrar disposing of I.A. 44291/2024, which was filed by the Defendants No.1 & 2 for summoning the Defendant No.3 as a witness.

While disposing of the said Application, the learned Joint Registrar has held that Defendant No.1 should first examine himself and only thereafter they can summon Defendant No.3 as a witness. It is the case of the Defendants No.1 & 2 that the Order dated 28.05.2025 is in teeth of the Order dated 28.06.2019, passed by the co-ordinate Bench of this Court in the present Suit and the Order dated 28.05.2025, passed by the learned Joint Registrar disposing of I.A. 44291/2024, must be set aside.

Shorn of unnecessary details, the facts of the case, are as under:-

a. It is stated that the Plaintiff is a company incorporated under the Companies Act, 1956, having its registered office at Bengaluru. It is stated that in January 2010, Defendant No. 1, who was known to the family of the Chairman-cum-Managing Director of the Plaintiff company, approached the Plaintiff seeking a friendly loan of Rs.2,00,00,000/- for a period of two years at the rate of 15% per annum. It is stated that Defendant No. 1 represented that he was the Director and the person in control of Defendant No. 2 – M/s Tuff Trak International Ltd., and requested that the loan be advanced in the name of the said company, while assuring that he would be personally responsible for repayment of the loan along with interest.

b. It is stated that relying upon the representations and assurances made by Defendant No. 1, the Plaintiff advanced a sum of Rs.2,00,00,000/- to Defendant No. 2 by bank transfer on 30.01.2010, with the clear understanding that the liability to repay the loan with interest was joint and several. It is stated that the loan was agreed to be secured by an equitable mortgage of the second floor of property bearing No. C-675, New Friends Colony, New Delhi, ad-measuring 537.5 sq. yards, together with proportionate undivided ownership rights.

c. It is stated that for the purpose of creating the equitable mortgage, Defendant No. 1 deposited with the Plaintiff the original registered Agreement to Sell dated 17.07.2008 and the original registered General Power of Attorney dated 17.07.2008 executed in favour of Defendant No.1 relating to the mortgaged property. It is stated that while handing over the documents of the mortgaged property, it was portrayed to the Plaintiff that these are the only title documents in respect of the mortaged property which were available with the Defendant No.1 and that no sale deed had yet been executed in favour of Defendant No.

It is stated that upon deposit of the said documents, an equitable mortgage was created in favour of the Plaintiff securing the loan amount and interest.

d. It is stated that after availing the loan, Defendant No. 1 repeatedly acknowledged the liability and assured the Plaintiff that the loan would be repaid within the agreed period. It is stated that upon expiry of the two-year period in January 2012, when the loan amount along with accrued interest became due, Defendant No. 1 sought extension of time for repayment, assuring that the dues would be cleared shortly. It is stated that relying upon these assurances, the Plaintiff acceded to the requests for extension.

e. It is stated that in the year 2012, the Plaintiff learnt that despite the original title documents of the mortgaged property being in the Plaintiff’s custody, Defendant No. 1 executed a sale deed in his favour without informing the Plaintiff. It is stated that when confronted, Defendant No. 1 assured the Plaintiff that the sale deed had been executed merely to perfect his title in the mortgaged property and that the mortgaged property would not be dealt with without the Plaintiff’s consent.

f. It is stated that as repayment of the loan amount continued to be delayed, the Plaintiff persistently demanded payment of the outstanding loan and interest thereof. In response, Defendant No. 1, on his behalf and on behalf of Defendant No. 2, issued six undated cheques drawn on Syndicate Bank, Scindia House Branch, New Delhi, towards part discharge of the principal and interest amount. It is stated that these cheques were issued with the assurance that they would be honoured upon presentation, though they were kept undated on the plea of temporary financial difficulty being faced by the Defendant No.1.

g. It is stated that after issuance of cheques, Defendant No. 1 requested the Plaintiff not to present the cheques immediately, on the ground that he was overseas and would clear the entire liability upon his return to India. It is stated that acting on this assurance, the Plaintiff deferred presentation of the cheques. It is stated that during this period, five out of the six cheques were misplaced, and accordingly an FIR was lodged on 26.04.2014 at Police Station Vasant Kunj to prevent any misuse of the cheques.

h. It is stated that thereafter, the Plaintiff discovered that Defendant No. 1 had sold the mortgaged property without the knowledge or consent of the Plaintiff. It is stated that upon being confronted, Defendant No. 1 apologised and undertook to provide fresh security for the outstanding loan. It is stated that Defendant No. 1 gave certified copies of the documents relating to his farm land measuring 12 bighas and 4 biswas situated at Village Jonapur, Tehsil Hauz Khas, New Delhi, through his representative, as security for repayment of the loan. It is stated that only certified copies were handed over, with an assurance that the original sale deed would be provided to the Plaintiff upon Defendant No. 1’s return to India.

j. It is stated that after the cheque was dishonoured, the Plaintiff issued a legal notice dated 14.08.2014, recalling the loan and demanding payment of Rs. 3,37,50,000/-, being the principal amount along with the accrued interest, within seven working days. It is stated that a separate notice under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, was also issued, which returned unserved with the remark “Left”. It is stated that despite service of notice, the defendants failed to discharge their liability.

k. It is stated that on account of continued default, repeated false assurances, and alleged dishonest conduct of the defendants, the Plaintiff instituted the present Suit seeking recovery of Rs.3,37,50,000/- with interest, along with a decree of permanent injunction restraining Defendant No. 1 from alienating or creating third-party interests in the farm land offered to the Plaintiff as security.

Summons in the Suit were issued on 10.09.2014.

By way of an Application being I.A. No.159/2018, filed by the Defendant No.1, Defendant No.3 was sought to be impleaded in the array of parties.

In the Written Statement filed by the Defendants No.1 & 2 it is stated that Defendant No. 2 was the owner in possession of the second-floor of flat bearing No. C-675, New Friends Colony, New Delhi, which is situated on a plot admeasuring 537.5 sq. yards. It is stated that on 30.01.2010, Defendant No. 2 entered into an Agreement to Sell with the Plaintiff company for sale of the said property for a total consideration of Rs.3,00,00,000/-. It is stated that the said Agreement to Sell was signed by the Defendant No.3 on behalf of the Plaintiff. It is stated that at the time of execution of the Agreement to Sell, Defendant No. 2’s title in the said property was not perfected, as the sale deed in its favour was yet to be executed, a fact admittedly known to the Plaintiff. It is stated that in terms of the Agreement to Sell dated 30.01.2010, the Plaintiff paid an advance of Rs.1,00,00,000/- to Defendant No. 2 by way of RTGS. It is stated that as per the Agreement to Sell, Defendant No. 2 was to perfect its title within six months, extendable by a further six months, and upon such perfection, the Plaintiff was required to pay the balance sale consideration of Rs. 2,00,00,000/-. It is the case of the Defendants that the original Agreement to Sell dated 17.07.2008 and the General Power of Attorney dated 17.07.2008 relating to the property in question were handed over to the Plaintiff only for safe keeping and to demonstrate bona fides under the Agreement to Sell, and not for the purpose of creating any mortgage. It is stated that on 27.12.2010, Defendant No. 2 duly perfected its title by execution of a sale deed in its favour and informed the Plaintiff of the same and called upon the Plaintiff to pay the balance sale consideration. It is stated that the Plaintiff expressed its inability to pay the remaining Rs.2,00,00,000/- and sought time. It is stated that on the Plaintiff’s request and considering the relationship between Defendant No. 1 and Defendant No.3, Defendant No. 2 granted an extension of six months up to 30.06.2011. It is stated that even after the extended period, the Plaintiff failed to make payment of the balance consideration and, therefore, the Agreement to Sell dated 30.01.2010 stood terminated, and the advance amount of Rs. 1,00,00,000/- was liable to be forfeited. It is stated that owing to urgent financial needs, Defendant No. 2 transferred the property in question back to the original vendor in November 2012 as a distress sale for a consideration of Rs. 2,00,00,000/-. It is stated that despite termination of the Agreement, Defendant No. 2 agreed to return the advance amount of Rs. 1,00,00,000/- to the Plaintiff, upon sale of the property. It is stated that between November 2012 and January 2013, several emails were exchanged in which the Plaintiff demanded payment of Rs. 1 crore along with interest, which was denied by the Defendants No.1 & 2. It is further stated that in furtherance of settlement discussions, in January 2013, the Defendants’ No.1 & 2 Counsel emailed photocopies of certain cheques with “confidential” markings to demonstrate bona fide intention to pay, clarifying that the cheques were not handed over and were subject to execution of a settlement agreement. It is stated that negotiations continued through 2013, and at one stage a proposal was discussed whereby a sum of Rs. 94,00,000/- was to be paid in full and final settlement, subject to agreed terms, though no settlement was concluded at that time and the cheques were eventually destroyed. It is stated that ultimately, on 16.07.2014, the Plaintiff and Defendant No. 2 entered into a Memorandum of Understanding (hereinafter referred to as “MoU”), whereby Defendant No. 2 agreed to pay Rs. 94,00,000/- as full and final settlement of all claims within 24 months from the date of execution of the MoU and an undated cheque bearing No. 639858 for Rs. 94,00,000/- was handed over to the Plaintiff only as security, with a clear stipulation that it was not to be presented for encashment. It is stated that this MoU was signed by the Defendant No.3 on behalf of the Plaintiff. It is stated that despite this stipulation, the Plaintiff dishonestly presented the cheque, leading to the present dispute. On 18.09.2018, statement of the Defendant No.3 was recorded in the Court. The impleadment application was allowed on 27.03.2019 by a Coordinate Bench of this Court.

Pleadings got completed. List of witnesses was filed by the Defendants No.1 & 2. Plaintiff’s evidence has been recorded.

An Application being I.A. No.2694/2024 was filed by Defendants No.1 & 2 seeking directions to the Defendant No.3 to lead evidence. The application was disposed of by the learned Joint Registrar vide Order dated 14.03.2024 on the statement of the learned Counsel for the Defendant No.3 that Defendant No.3 does not want to file Written Statement or lead evidence.

Another Application, being I.A. 44291/2024, was filed by Defendants No.1 & 2 for summoning Defendant No.3 as a witness. The said Application was disposed of by the learned Joint Registrar vide the Impugned Order dated 28.05.2025, wherein the learned Joint Registrar has held that since Defendant No.3 has been impleaded in the array of parties and he has filed his affidavit stating that he does not want to file Written Statement or lead evidence, he cannot be said to be a total stranger to the Suit. The learned Joint Registrar also noted the contention of the Defendants Nos.1 & 2, that they have the right to examine and cross-examine Defendant No.3 on the basis of documents filed by them indicating that the MoU was signed by the Defendant No.3 on behalf of the Plaintiff. However, the learned Joint Registrar held that the Defendant No.1 should himself first step in the witness box to prove the documents filed by him and only thereafter, can he summon the Defendant No.3 as a witness.

It is this Order which has been challenged by the Defendants No.1 & 2 in the present Chamber Appeal.

The ground taken by the Defendants No.1 & 2 in the present Appeal is that the Order passed by the learned Joint Registrar is contrary to the Order dated 26.08.2019 passed by a Co-odinate Bench of this Court wherein the Co-ordinate Bench has held that the Defendant No.3 has to first lead evidence and only thereafter Defendants No.1 & 2 would be given an opportunity to lead evidence.

It is pertinent to mention that after the Order dated 26.08.2019 was passed, the learned Joint Registrar, while considering an Application being I.A. No.2694/2024, held that Defendant No.3 does not want to file Written Statement or lead evidence.

That being the case, in accordance with Order 18 Rule 3A of the CPC it is not open for the Defendants No.1 & 2 to call Defendant No.3 to lead evidence before proving the documents which have been filed by them.

Order 18 Rule 3A of the CPC reads as under:

In any event, it is the case of the Defendants No.1 & 2 in the Written Statement that the MoU dated 16.07.2014 was entered into by the Defendant No.3 on behalf of the Plaintiff. Till MoU dated 16.07.2014 is not proved or evidence is lead in that behalf, Defendant No.3 cannot be brought into the witness box. After proving the MoU dated 16.07.2014, it is open for the Defendants No.1 & 2 to move an appropriate application under Order XVI Rule 14 of CPC seeking a direction from the Court to summon Defendant No.3 as a witness and then examine him.

Accordingly, this Court is of the opinion that the Order dated 28.05.2025, passed by the learned Joint Registrar cannot be found fault with and, therefore, does not require any interference.

The Appeal is dismissed.

List before the learned Joint Registrar on 10.04.2026.