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Whether plaintiff can file a Summary suit based on the entry in the bank passbook about the transfer of money to the defendant?

Whether plaintiff can file a Summary suit based on the entry in the bank passbook about the transfer of money to the defendant?

The brief background is that the Plaintiff filed a summary suit under

Order XXXVII CPC for recovery of a sum of Rs.21 lakhs along with

interest. The case of the Plaintiff is that the Plaintiff gave a loan to the Defendant to the tune of Rs.21 lakhs, which was transferred from the bank account of the Plaintiff in Bank of Baroda to the bank account of the Defendant’s firm i.e., MK Clothing, in HDFC Bank, Priyadarshini Vihar, Delhi. The payment of Rs.21 lakhs and receipt thereof on 8th August, 2015 is not disputed by the Defendant. 

14. Considering the fact that the amount, which was transferred by the Plaintiff to the Defendant was through proper banking channels for which clear evidence has been placed on record, the suit under Order XXXVII CPC would be maintainable as it is for a liquidated sum. The onus would be on the Defendant to show as to why the leave to defend should be granted.

 IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision: 15th December, 2020

 C.R.P. 57/2020 & CM APPL.20305/2020

SURENDER KUMAR  Vs  MANOJ KUMAR 

CORAM:

JUSTICE PRATHIBA M. SINGH

Prathiba M. Singh, J. (Oral)

Dated: DECEMBER 15, 2020

1. This hearing has been done by video conferencing.

2. The present petition challenges the order dated 18th August, 2020 by

which the suit under Order XXXVII Rule 3(5) CPC filed by the

Plaintiff/Petitioner (hereinafter ‘Plaintiff’) has been converted into an

ordinary suit and unconditional leave to defend has been granted to the

Defendant/Respondent (hereinafter ‘Defendant’).

Order XXXVII CPC for recovery of a sum of Rs.21 lakhs along with

interest. The case of the Plaintiff is that the Plaintiff gave a loan to the

Defendant to the tune of Rs.21 lakhs, which was transferred from the bank

account of the Plaintiff in Bank of Baroda to the bank account of the

Defendant’s firm i.e., MK Clothing, in HDFC Bank, Priyadarshini Vihar,

Delhi. The payment of Rs.21 lakhs and receipt thereof on 8th August, 2015

is not disputed by the Defendant. According to the Plaintiff, the Defendant

bought a Mercedes car by using the amount given by the Plaintiff. The


Plaintiff repeatedly sought repayment of the amount, which was not done.

Hence, the suit for recovery was filed.

4. In support of the Plaintiff’s claim of bank transfer of Rs.21 lakhs, the

Plaintiff’s bank passbook of Bank of Baroda has been placed on record.

The passbook shows four transactions i.e., three transactions of Rs.5 lakhs

each and one transaction of Rs.6 lakhs – all in favour of M.K. Clothing.

.

 5.The case of the Defendant in the leave to defend application is that

the Defendant had given a loan to the Plaintiff in cash in 2013-14, which

was repaid by the Plaintiff through banking channels. However, not a single

document has been placed on record by the Defendant, either in support of

the leave to defend application or even thereafter, along with the written

statement.

6. Mr. Harsh Kumar, ld. counsel for the Plaintiff relies upon two

judgments of this Court in Anju & Anr. v. Rampal & Anr. [CS (OS)

1159/2014, decided on 11th April, 2019] and Jindal Steel & Power Limited

v. N.S. Atwal [CS(OS) 713/2010, decided on 4th July, 2013] to argue that

once the money is paid through banking channels, an Order XXXVII CPC

suit is liable to be entertained. Further, it is argued that technicalities ought

not to come in the way if receipt of the amount is admitted and the suit

would be liable to be decreed.

7. On the other hand, Mr. Hemant Chaudhari, ld. counsel for the

Defendant submits that the Defendant disputes the fact that the amount was

a loan. Though the amount is credited to the Defendant’s bank account, the

same was merely in repayment of a loan given by the Defendant. He fairly

states that no document has been placed on record in support of this

contention until this stage. Ld. counsel also raises an issue as to the suit  being barred by limitation.

8. Heard ld. counsels for the parties. A perusal of the impugned order

shows that the Trial Court has held that a mere bank passbook would not be

sufficient to show the nature of the transaction and the mutually agreed

terms and conditions and whether it is a loan or not. The observations of the

Trial Court are as under:

“11. …. However, in the case at hand there is no

document under the signature of the defendant to

show that what was transferred to his bank

account was in fact towards a loan. It also bears

repetition to state that there is no document

whatsoever to show as to what were the terms and

conditions of any such contract between the

parties. There is no document in writing

evidencing any contract. The photocopy of the

bank passbook showing such a transfer through

cheques will not of its own accord constitute a

written contract. There is no document, under the

signature of defendant, to show that what was

transferred to his bank account was actually a

loan and no other transaction. It is only the self

serving ipse dixit of the plaintiff as set out in his

plaint (and nowhere else) that it comes out that it

was a loan. Merely and merely on the basis of

what is averred in the plaint, this Court will not

take it that it was a loan transaction and no other

transaction. A photocopy of the bank passbook

would at the most show such a transfer but the

same will not show the nature of the transaction,

the mutually agreed terms and conditions and

whether it was in fact a loan or some other

transaction. Had there been a receipt, or else a

cash receipt showing that it was a loan

transaction, the matter may have been entirely

different. The only and only document being

relied upon is photocopy of a bank passbook. This

document would not show as to what was the

nature of the transaction and why the amount was

transferred to defendant's account. It would also

not show as to whether the transaction was one

that was not prohibited by law. If in a given case

it turns out the the transaction was illegal, the

mere fact that there is a copy of bank passbook

showing such a transfer, without anything more,

the outcome may be entirely different.”

9. As per the above findings, the Trial Court holds that since the only

document relied upon is a bank passbook, the reasons why the money was

transferred would not be clear from the said passbook. It would only show

that the transaction was one that was not prohibited by law. In view thereof,

the unconditional leave to defend was granted.

10. The law in respect of a suit under Order XXXVII CPC is well settled by the Supreme Court in the judgment of IDBI Trusteeship Services Ltd. v. Hubtown Ltd (2017) 1 SCC 568 wherein the Supreme Court has held as under:

“17. Accordingly, the principles stated in para 8

of Mechelec case [Mechelec Engineers &

Manufacturers v. Basic Equipment Corpn., (1976)

4 SCC 687] will now stand superseded, given the

amendment of Order 37 Rule 3 and the binding

decision of four Judges in Milkhiram case

[Milkhiram (India) (P) Ltd. v. Chamanlal

Bros., AIR 1965 SC 1698 : (1966) 68 Bom LR 36],

as follows:

17.1. If the defendant satisfies the court that

he has a substantial defence, that is, a

defence that is likely to succeed, the

plaintiff is not entitled to leave to sign

judgment, and the defendant is entitled to

unconditional leave to defend the suit.

17.2. If the defendant raises triable issues

indicating that he has a fair or reasonable

defence, although not a positively good

defence, the plaintiff is not entitled to sign

judgment, and the defendant is ordinarily

entitled to unconditional leave to defend.

17.3. Even if the defendant raises triable

issues, if a doubt is left with the trial Judge

about the defendant's good faith, or the

genuineness of the triable issues, the trial

Judge may impose conditions both as to

time or mode of trial, as well as payment

into court or furnishing security. Care must

be taken to see that the object of the

provisions to assist expeditious disposal of

commercial causes is not defeated. Care

must also be taken to see that such triable

issues are not shut out by unduly severe

orders as to deposit or security.

17.4. If the defendant raises a defence

which is plausible but improbable, the trial

Judge may impose conditions as to time or

mode of trial, as well as payment into court,

or furnishing security. As such a defence

does not raise triable issues, conditions as

to deposit or security or both can extend to

the entire principal sum together with such

interest as the court feels the justice of the

case requires.

17.5. If the defendant has no substantial

defence and/or raises no genuine triable

issues, and the court finds such defence to

be frivolous or vexatious, then leave to

defend the suit shall be refused, and the

plaintiff is entitled to judgment forthwith.

17.6. If any part of the amount claimed by

the plaintiff is admitted by the defendant to

be due from him, leave to defend the suit,

(even if triable issues or a substantial

defence is raised), shall not be granted

unless the amount so admitted to be due is

deposited by the defendant in court.”

11. Order XXXVII Rule 1 CPC applies to suits in which a debt or

liquidated demand is sought to be recovered. The term ‘liquidated demand’ has been defined by a ld. Single Judge of this Court in Rajinder Kumar Khanna v. Oriental Insurance Co., AIR 1990 Del 278 as follows:

“2. It was asserted by the plaintiff in the suit and

the petitioner before me, that the claim in the suit

was a “liquidated demand”. The petitioner seeks

to take advantage of the amendments made to the

Code of Civil Procedure, by which “liquidated

demand” became subject-matter of summary suits

for the first time.

3. The industry of counsel had not been able to

produce a single precedent of courts in India,

which explained what is “liquidated demand”.

However, reference has been made to Words and

Phrases Permanent Edition, in which reference is

made to Rifkin v. Safenovitz, 40 A 2d 188. It is

stated that “amount claimed to be due is a

“liquidated demand” within statute authorizing

summary judgments if it is susceptible of being

made certain in amount by mathematical

calculations from factors which are or ought to be

in possession or knowledge of party to be

charged”.”

It is therefore clear that any sum which can be ascertained from the

documents on record would constitute a liquidated demand.

12. As per the above decisions, the Court has to see as to whether the suit relates to the liquidated sum and whether any plausible defence has been set up by the Defendant. In the present case, a perusal of the leave to defend shows that the plea of the Defendant is as under:

“B. That the deponent never took any loan from

the plaintiff on 08.08.2015 to the tune of

Rs.21,00,000/-, in fact, it was the plaintiff, who

took the loan from the deponent time to time

during the period of 2013 to 2014 in cash to meet

his business needs and later on in order to repay

the same, he transferred the said amount in the

account of the firm of the deponent. Now, by

taking the advantage of the said bank transfer, the

plaintiff cooked up a false story and filed the

aforesaid false suit against the deponent without

any legal enforceable liability payable to the

plaintiff by the deponent.”

13. In support of the plea of the Defendant that he gave a loan to the

Plaintiff in 2013-14, which was being given on a continuous basis of

various amounts from time to time, there is not a single document that has

been placed on record. It is highly improbable that any party which is

giving huge sums of money would not file a single receipt or promissory

note and merely proceed to lend money on some oral arrangement. Even

otherwise, a perusal of the leave to defend does not inspire confidence.

14. Considering the fact that the amount, which was transferred by the Plaintiff to the Defendant was through proper banking channels for which clear evidence has been placed on record, the suit under Order XXXVII CPC would be maintainable as it is for a liquidated sum. The onus would be on the Defendant to show as to why the leave to defend should be granted.

15. At this stage, since ld. counsel for the Defendant clearly concedes

that no document has been placed on record in support of the plea that a

loan was given to the Plaintiff, allowing unconditional leave to defend would not be in accordance with law. At best, since the written statement has now been filed and the suit is proceeding further, this Court is of the opinion that the suit under Order XXXVII CPC is maintainable but some conditions be imposed upon the Defendant to permit him to defend his case.

16. Accordingly, it is directed that the Defendant shall furnish either a Bank Guarantee or any other security to the tune of Rs.10 lakhs, to the satisfaction of the Trial Court, within 8 weeks. Subject to the said condition being fulfilled, the written statement shall be taken on record and trial in the  suit shall continue.

17. The petition is disposed of in the above terms. All pending

applications are also disposed of.


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