Allowed

Nilima Synthetics Pvt. Ltd. v. Manojkumar Agrawal

Gujarat HC14 Jun 2018SCA/8363/2012

Case brief

AI extract

What is this about?

The High Court of Gujarat set aside a trial court order that conditionally granted leave to defend a summary suit. The High Court held that since triable issues regarding limitation and maintainability existed, the original defendants were entitled to unconditional leave to defend, and the trial court's requirement to deposit 50% of the claim amount was erroneous.

What did the court decide?

Order dated 14.05.2012 passed in application below Ex. 23 is quashed; petitioners permitted to defend the suit unconditionally.

Nilima Synthetics Pvt. Ltd. Vs Manojkumar… — Contract and Commercial Disputes | Gujarat HC (2018)

¶1

C/SCA/8363/2012 JUDGMENT

¶2

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

¶3

R/SPECIAL CIVIL APPLICATION NO. 8363 of 2012

¶4

FOR APPROVAL AND SIGNATURE:

¶5

HONOURABLE MR.JUSTICE BIREN VAISHNAV

¶6

==========================================================

¶7

1 Whether Reporters of Local Papers may be allowed to see the judgment ?

¶8

2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?

¶9

4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?

¶10

==========================================================

¶11

NILIMA SYNTHETICS PVT LTD

¶12

Versus

¶13

MANOJKUMAR AGRAWAL

¶14

==========================================================

¶15

Appearance:

¶16

MR MP SHAH(2418) for the PETITIONER(s) No. 1,2,3,4,5,6 MS. KRUTI M SHAH(2428) for the PETITIONER(s) No. 1,2,3,4,5,6 MS KJ BRAHMBHATT(202) for the RESPONDENT(s) No. 1 MS VARSHA BRAHMBHATT(3145) for the RESPONDENT(s) No. 1

¶17

==========================================================

¶18

CORAM: HONOURABLE MR.JUSTICE BIREN VAISHNAV

¶19

Date : 14/06/2018

¶20

ORAL JUDGMENT

¶21

The petitioners are the original defendants and the respondent is the original plaintiff in Summary Suit No. 18 of

¶22

Page 1 of 8

¶23

C/SCA/8363/2012 JUDGMENT

¶24

The petitioners are before this Court challenging the order dated 14.05.2012 passed in application below Ex. 23 filed in Summary Suit No. 18 of 2008. By the said order, the defendants were refused permission to unconditionally defend the summary suit. The trial Court granted leave to defend the said suit on condition that the defendants deposit 50% of the amount due as per the amount claimed by the plaintiff.

¶25

The respondent herein – original plaintiff had filed a suit contending that he was in the business of selling POY yarn. It was his case that the petitioner no. 1 and the remaining petitioners were the Directors who had purchased goods worth Rs.7,92,995/- in the year 2005 and therefore together with an interest of Rs.4,22,545/-, the respondent – original plaintiff was entitled to a sum of Rs.12,15,540/-. A summary suit, therefore, invoking Order 37 of the Code of Civil Procedure, 1908 was filed.

¶26

2.1 After summons for judgement was issued, the original defendants – petitioners herein filed an application below Ex. 23 seeking unconditional leave to defend. In the application so filed seeking unconditional leave, it was the case of the petitioners that they had not undertaken such a transaction of purchase of yarn and that the bills for an amount of Rs.7,92,995/- dated 07.05.2005, 08.05.2005 and 11.05.2005 were forged and bogus. A further pleading was made in the application that the fact that there was no proof of the delivery challans or the bills as to the amount of yarn, the weight and the tempos in which such goods were sent was absent, the entire transaction so alleged to have occurred had in fact not so occurred; that the bills were subsequently got

¶27

Page 2 of 8

¶28

C/SCA/8363/2012 JUDGMENT

¶29

up. It was further the case of the defendants that the books of accounts for the period from 01.04.2005 to 31.03.2006 and 01.04.2006 to 31.03.2008 were wrong and no money was due to the plaintiff. A preliminary contention was also raised that the bills under which such amounts were claimed were of May 2005 namely 07.05.2005, 08.05.2005 and 11.05.2005 whereas the suit was filed on 13.05.2008, beyond a period of three years. The suit was, therefore, barred by limitation.

¶30

2.2 The plaintiff objected to the application seeking unconditional leave to defend. Pointing out the provisions of Order 37, it was the case of the plaintiff – respondent herein that such a defence raised by the defendants was not a substantial defence; that it was frivolous and vexatious and that the fact that they had not lodged criminal complaint suggesting that the bills were bogus, it was a case where a false defence was sought to be raised. As far as question of limitation was concerned, it was the case of the plaintiff that the suit was within the period of limitation because from the last bill dated 11.05.2005, the petitioners had been given a credit period of seven days. Moreover, it was the case of the plaintiff that it was not open for the defendant to deny such a transaction when the Directors themselves had issued a cheque for an amount of Rs.2,69,432/- on 20.05.2005 towards part payment of such transactions and the cheque had bounced. The plaintiff, therefore, suggested that there was no reason that the defendants be granted unconditional leave to defend as there was no triable issue to be raised and the defence was illusory.

¶31

Ms. Kruti M. Shah, learned advocate appearing on

¶32

Page 3 of 8

¶33

C/SCA/8363/2012 JUDGMENT

¶34

behalf of the petitioners has taken me to the order of the trial Court below Ex. 23. She has assailed the order of the trial Court on the ground that the trial court failed to appreciate that when the defence of the defendants was plausible and was a substantial defence, it was not open for the trial court to insist on a conditional leave to defend as so directed. She further submitted that a categorical case was made out denying issuance of such bills or that such a transaction was entered into and averments in the application so made suggested that no such transaction in fact had occurred. Apart from the fact that no summary suit would lie under the provisions of Order 37, it was her case that even assuming without admitting that such a summary suit was maintainable, the learned trial Court ought to have granted unconditional leave to defend in view of the extensive averments made in the application which would suggest a plausible and substantial defence which was not vexations or frivolous. In support her submissions, Ms. Shah has relied upon the decision of the Apex Court in the case of M/s. Mechelec Engineers & Manufacturers vs. M/s. Basic Equipment Corporation reported in (1976) 4 SCC 687 . Taking me through this judgement, Ms. Shah has contended that when a triable issue is raised, as was in the present one, leave to defend unconditionally ought to have been granted. She has also relied on another decision rendered by this Court in the case of State Bank of Saurashtra vs. M/s. Ashit Shipping Services (P) Ltd. & Anr. reported in 2002(2) GLH 673 , more particularly paras 12, 13 and 17.

¶35

3.1 Essentially, therefore, in the submission of Ms. Shah, the trial Court committed an error in granting conditional leave

¶36

Page 4 of 8

¶37

C/SCA/8363/2012 JUDGMENT

¶38

to defend when apparently in the operative portion of the order, the Court has come to a specific opinion that there was a question of limitation which could be only decided on the basis of evidence and also opined that the question whether the suit was maintainable under Order 37 was a question that needed to be decided. Apparently, therefore, according to Ms. Shah when the Court itself had opined that there were two triable issues namely that of limitation and that whether the suit was maintainable under Order 37 of the Civil Procedure Code, 1908, unconditional leave to defend ought to have been granted.

¶39

Ms. Varsha Brahmbhatt, learned counsel appearing for the respondent – original plaintiff has supported the order of the learned trial Court. It is her contention that the stand of the petitioner – original defendant cannot be said to be one of a substantial defence and it amounted to “moonshine” as held by several judgements of the Supreme Court. Having taken me extensively to the affidavit-in-reply, she has contended that the learned trial Court has considered the defence of the petitioner, the documents on record and held that the case of the defendant of denial of purchase of goods based on forgery of bills is not a bonafide defence. She further submitted that the original bills are not produced as is evident in all commercial transactions that the original bills are always given to the purchaser. The fact that one of the directors gave out a cheque which subsequently bounced suggests that the fact that such a transaction had occurred cannot be denied. No triable issue was raised and therefore the trial Court was right in refusing unconditional leave to defend.

¶40

Page 5 of 8

¶41

C/SCA/8363/2012 JUDGMENT

¶42

4.1 In support of her submission, she has reiterated the judgement which the trial court has relied upon in the case of Greengold Timber Private Limited vs. Shipra Ocean Trade Pvt. Ltd reported in AIR 2007 Gujarat 157 . Relying on such judgement, Ms. Brahmbhatt suggested that even in a case where one of the issues was triable, the Court granted conditional leave to defend. In the present case, when no such triable issues were raised, the trial Court did not commit any error. Relying on the judgement in the case of Bharat Forge Ltd. vs. Onil Gulati reported in AIR 2005 Delhi 369, particularly paragraph 13 , Ms. Brahmbhatt contended that when there were bills on record and proof of the delivery having been made, transactions could never have been a matter of doubt and the bogey of forged bills and concocted accounts was a frivolous and vexatious defence.

¶43

Having considered the submissions of the learned advocates appearing on behalf of the respective parties and on perusal of the order passed in application below Ex. 23, what is evident is that it is the case of the defendant that the bills were dated 07.05.2005, 08.05.2005 and 11.05.2005 whereas the suit was filed on 13.05.2008. Be that as it may, as contended by learned advocate Ms. Varsha Brahmbhatt for the respondent, that a credit period of 7 days would bring the suit within limitation. The learned trial Court while granting conditional leave to defend has in no uncertain terms observed that a question of limitation is a question that can be decided on leading of evidence. Obviously, therefore, a prima facie view has been taken by the learned trial Court that the question of limitation is triable.

¶44

Page 6 of 8

¶45

C/SCA/8363/2012 JUDGMENT

¶46

Ms. Shah, learned advocate appearing on behalf of the petitioner has raised a contention that the suit under Order 37 was not maintainable particularly in view of the fact that it was not arising out of any contract. That the invoices have been raised and bills of exchange has been denied by the petitioners – defendants, the sole ground on which such a stand of the defendants is not accepted is only on account of the fact that the petitioners have not lodged any criminal complaint. That in my opinion would not make the defence frivolous or vexatious. Even the trial court in the closing portion of the order has questioned whether a suit would lie under Order 37. This itself indicates that the trial court on the counts of limitation and maintainability of the suit was of the opinion that the two issues are triable issues and that the petitioners – original defendants had a fair or bonafide or reasonable defence which could not be said to be vexatious or frivolous. I, therefore, do not agree with the submissions of Ms. Brahmbhatt that such a defence can be said to be illusory or sham or practically moonshine.

¶47

In view of the aforesaid, I am of the opinion that the trial Court committed an error in permitting the defendants to defend the summary suit on a condition of deposit of 50% of the claim amount. In view of a valid and a proper defence raised and triable issues of limitation and maintainability of the suit, the trial court ought to have granted unconditional leave to defend to the petitioner.

¶48

Accordingly, the order dated 14.05.2012 passed in application below Ex. 23 filed in Summary Suit No. 18 of 2008 is hereby quashed and set aside. The petitioners – original

¶49

Page 7 of 8

¶50

C/SCA/8363/2012 JUDGMENT

¶51

defendants are permitted to defend the suit unconditionally. petition is allowed accordingly. Rule is made absolute.

¶52

(BIREN VAISHNAV, J)

¶53

DIVYA

¶54

Page 8 of 8

Nilima Synthetics Pvt. Ltd. v. Manojkumar Agrawal

Case brief

What is this about?

What did the court decide?

Nilima Synthetics Pvt. Ltd. v. Manojkumar Agrawal

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Kanjibhai Dalsukhbhai Solanki Vs Rajubhai Ranchhodbhai Sampat

Sushilaben B Shah Vs Premaben Buddising Gupta Since Deceased through Legal Heirs

Rana Project International Limited Vs Gayatri Polymers and Geosynthetics

Ramesh Kedarnath Sharma Vs Omprakash Sohanlal Jadav

Ramesh Kedarnath Sharma Vs Omprakash Sohanlal Jadav

Torrent Pharmaceuticals Ltd. Vs Deepakkumar Vinubhai Thaker