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SUPREME COURT OF INDIA
Ashok Bhushan, Navin Sinha, JJ.
SUDIN DILIP TALAULIKAR – APPELLANT(S)
VERSUS
POLYCAP WIRES PVT. LTD. AND OTHERS – RESPONDENT(S)
CIVIL APPEAL NO(s).5528 OF 2019 (arising out of SLP (Civil) No(s). 9368 of 2018)
Decided On : 15-07-2019
Code of Civil Procedure, 1908 - Order XXXVII, Rule 3(5) - Summary - Object is expeditious disposal of a commercial dispute - Discretion to court to grant conditional leave to defend - Court required to maintain the delicate balance between the respective rights and contentions by not passing an order which may ultimately end up impeding the speedy resolution of the dispute - Instantly appellant raising a substantial defence and genuine triable issues - Held, appellant was entitled to unconditional leave to defence. (Para 16, 17)
Facts of the case:
The respondent supplied electrical cables and wires to the appellant between 09.05.2010 to 03.06.2011. Acknowledging some payments they claimed outstanding dues of Rs.34,24,633/-. Likewise, for supplies between 01.04.2010 to 10.03.2011 they claimed dues of Rs.1,88,377/-. A notice was given to the appellant under Section 138(b) of the Act after the cheques dated 01.03.2014 and 01.03.2014 were dishonored, as the account was blocked. The respondent then instituted a prosecution under Section 138 read with Section 142 of the Act lodged on 30.04.2014 with regard to the former instrument and on 01.08.2014 with regard to the latter instrument.
While the prosecution under the Act was pending, the respondent instituted the present summary suit on 24.11.2015 for a cumulative sum of Rs.36,13,410/-, being the total amount of two dishonored instruments, with an additional claim for Rs.28,05,199/- as interest at the rate of 18% per annum amounting to a total of Rs.64,18,609/-. The Suit expressly referred to the pendency of the prosecution under the Act.
Denying any dealings with the respondents after 2011, the appellant questioned that there was no occasion for it to issue a cheque in the year 2014 for any alleged dues of the year 2011. It was further contended that different inks had been used in the instruments for the signatures and its contents. Defective goods on the consignment had been returned and the balance of Rs.5,00,000/- paid, facts which were not disputed by the respondent.
The Civil Judge recorded the satisfaction of a triable defence but granted conditional leave to defend with an unreasoned finding based on the existence of a commercial relationship between the parties. The High Court acknowledged that there was no admission by appellant about its liability to repay any amount, but because the appellant had not disputed a commercial relationship and purchase of goods from the respondent, and in absence of any material to show sufficient payment, held that the order for conditional leave to defend required no interference.
Finding of the Court:
Appellant was entitled to unconditional leave to defence.
Result: Appeal allowed.
JUDGMENT
NAVIN SINHA, J.
Leave granted.
2. The appellant is aggrieved by grant of conditional leave to defend in Summary Suit No. 1289 of 2015 filed against him, by the respondent under Order XXXVII of the Code of Civil Procedure, 1908 (hereinafter referred to as “the Code”) for recovery of Rs.64,18,609/-, inclusive of interest.
3. Learned counsel for the appellant submitted that under the Second Proviso to sub-Rule 5 of Rule 3 of Order XXXVII of the Code, the condition for deposit of Rs.30,00,000/- could not have been ordered in absence of any admissible dues. The fact that there may have been a commercial transaction between the parties in the past, cannot ipso facto be construed as an admission of debt merely because the respondent may have so claimed in the suit. The respondent had unconditionally withdrawn the prosecution instituted by him earlier under Section 138 of Negotiable Instruments Act (hereinafter referred to as “the Act”), for the same dues. All legitimate dues have been paid. The defective goods were returned, the balance of five lacs was also paid, and the accounts cleared, after which no further transactions had taken place between the parties. Reliance was placed on IDBI Trusteeship Services Limited vs. Hubtown Limited, 2017(1) SCC 568.
4. Learned counsel for the respondent submitted that the summary suit had been instituted for recovery of outstanding dues with regard to goods supplied to the appellant. It was for the appellant to demonstrate that he had paid for goods. The impugned orders notice that the appellant had placed no documentary evidence in his reply. The reference to the admitted commercial transaction between the parties has been made in that context. The withdrawal of the criminal prosecution was irrelevant. It was no bar to the maintainability of the summary suit. It is for the appellant to prove during the trial of the suit that he had in fact paid for the goods as claimed. The impugned orders are based on sound exercise of discretion in the facts of the case and merit no interference.
5. A brief recapitulation of facts would bring the matter in proper perspective for appreciation of issues involved. The respondent supplied electrical cables and wires to the appellant between 09.05.2010 to 03.06.2011. Acknowledging some payments they claimed outstanding dues of Rs.34,24,633/-. Likewise, for supplies between 01.04.2010 to 10.03.2011 they claimed dues of Rs.1,88,377/-. A notice was given to the appellant under Section 138(b) of the Act after the cheques dated 01.03.2014 and 01.03.2014 were dishonored, as the account was blocked. The respondent then instituted a prosecution under Section 138 read with Section 142 of the Act lodged for Rs.34,24,633/- on 30.04.2014 with regard to the former instrument and on 01.08.2014 with regard to the latter instrument. Different dates have been mentioned in different documents placed before us.
6. While the prosecution under the Act was pending, the respondent instituted the present summary suit on 24.11.2015 for a cumulative sum of Rs.36,13,410/-, being the total amount of two dishonored instruments, with an additional claim for Rs.28,05,199/- as interest at the rate of 18% per annum amounting to a total of Rs.64,18,609/-. The Suit expressly referred to the pendency of the prosecution under the Act.
7. In Summons for Judgment No. 105 of 2016 dated 16.03.2016, in the summary suit the respondent relied upon the extracts of accounts of the appellant to support its claim for unpaid dues. The prosecutions under the Act were withdrawn on 14.12.2015. The order withdrawing the prosecution under the Act is unconditional in nature and is a suo-moto action.
8. The appellant in its defence to the summons for judgment relied upon the institution of the prosecution under the Act prior to the suit and its unconditional withdrawal to contend that there were in fact no dues payable. The appellant further relied upon an order dated 29.10.2015 passed in the prosecution under t
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