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1996 Supreme(Del) 543
High Court Of Delhi
MARUTI UDYOG LIMITED - Appellant
Versus
HI-Q INTERNATIONAL - Respondent
Decided On : 07/01/1996
A defendant is not entitled to leave to defend if the defence set up is illusory or sham or practically moonshine.
Headnote:
ORDER XXXVII RULE 3 CPC - LEAVE TO DEFEND - CONTRACT FOR SUPPLY OF REP LICENCES - DISHONOURED CHEQUE - SUMMARY JUDGMENT - NO TRIABLE ISSUE - NO DEFENCE - LEAVE TO DEFEND DISMISSED - DECREE FOR PLAINTIFF WITH INTEREST.
Fact of the Case:
Plaintiff filed a suit under Order XXXVII CPC for recovery of Rs. 7 lacs arising from a contract for the supply of REP licences. Defendant issued a cheque for earnest money/security deposit, which was dishonoured. Defendant sought leave to defend, claiming an oral understanding and alleging no loss to the plaintiff.
Finding of the Court:
The court found that there was a contract between the parties and that the defendant had no triable issue or defence. The court held that the defendant deliberately issued a cheque without funds and allowed it to be dishonoured, and that the plaintiff had suffered loss.
Issues: Whether the defendant had a triable issue or defence to the claim.
Ratio Decidendi: The court applied the principles laid down by the Supreme Court in M/s. Mechalec Engineers and Manufacturers v. M/s. Basic Equipment Corporation, AIR 1977 Supreme Court 577, and held that the defendant had no triable issue or defence. The court also held that the defendant's conduct in issuing a cheque without funds and allowing it to be dishonoured was not good and that the plaintiff was entitled to interest at the rate of 18% per annum from the date of the suit till realization.
Final Decision: The court dismissed the defendant's application for leave to defend and granted a decree in favor of the plaintiff for the sum of Rs. 7 lacs with interest at the rate of 18% per annum from the date of the suit till realization.
( 1 ) THE plaintiff has filed a suit under Order XXXVII CPC against the defendant for the recovery of Rs. 7 lacs arising out of a contract between the parties for the supply of what is called REP licences. The case of the plaintiff can be stated briefly in the following terms.
( 2 ) THERE was a tender issued by the plaintiff calling upon the interested persons for the supply of REP licences. In response to that tender the defendant by fax message dated 10. 4. 1991 offered to sale REP licences (non-flexible) at the value of Rs. 3 crores at a premium of 12. 75% subject to the licence being valid upto 3-1/2 months. The defendant undertook to deliver the licences within 7 days as required by the plaintiff. On the same date, 10. 4. 1991, the plaintiff accepted the offer made by the defendant and directed the defendant to supply the REP licences (nonflexible) so as to reach the plaintiff on or before 17. 4. 1991. It is made clear in the letter that if the supply was not made by 17. 4. 1991 the plaintiff would be at liberty to forfeit the earnest money/security deposit without notice to the defendant.
( 3 ) ON the same date, 10. 4. 1991 the defendant sent a cheque of Rs. 5,73,750. 00 in favour of the plaintiff drawn on State Bank of Mysore, Whites Road Branch, Madras. This amount represents the earnest money/security deposit at 15% of the premium amount (12. 75%) on Rs. 3 crores. The defendant also gave him validity of 3 months.
( 4 ) PURSUANT to the terms of the contract the defendant delivered REP licences to the value of Rs. 2 crores and there remained delivery of licences for the value of Rs. 1 crore.
( 5 ) ON 25. 1. 1996 the plaintiff gave notice to the defendant that owing to the default committed by the defendant in non supplying REP licences to the value of Rs. 1 crore. The plaintiff had to obtain from the open market on or before 23. 5. 1991 at a higher rate of premium at 18. 75%. Consequently the plaintiff suffered a loss of Rs. 6 lacs. The plaintiff called upon the defendant to pay the sum of Rs. 6 lacs within 15 days from the date of receipt of the notice. It is asserted by the plaintiff that it was not under any obligation to return the REP licences worth Rs. 2 crores as the defendant did not make up the balance supply of REP licences worth Rs. I crore. It is also asserted that the plaintiff was not concerned with the prevailing rate of premium at the time of delivery of the licences by the defendant to the plaintiff because the defendant is bound by the offer made by it.
( 6 ) ON the defendant not acting as per the terms of the contract the plaintiff sought to encash, the cheque issued by the defendant on 10. 4. 1991 for Rs. 5,73,750. 00 towards earnest money/security deposit through its bank, namely, Canara Bank, Parliament Street, New Delhi. The cheque was dishonoured on 19. 7. 1991. The plaintiff issued notice to the defendant calling upon it to pay the amount.
( 7 ) ON 23. 8. 1991 the plaintiff issued notice through its Counsel.
( 8 ) BY letter dated 16. 9. 1991 the advocate on behalf of the defendant wrote to the plaintiff stating that a detailed reply would be sent a few days later but no reply has been sent by the defendant.
( 9 ) ACCORDING to the plaintiff the following amount is due from the defendant:
(I) The amount of differential premium between the rate at which REP licences were contracted to be purchased from the Defendant and the rate at which Rs. I crore worth of REP licences (non-flexible) were purchased from the market on default by the defendants 6,00,000. 00. (ii) Including interest at the rate of 18% per annum from 18. 4. 1991 upto 5. 5. 19921,00,000. 00. (iii) Further interest at the rate of 18% per annum on the above amounts and till the date of payment.
( 10 ) THIS claim is made on the basis of the contract in writing between the parties.
( 11 ) ON summons of judgment being served the defendant filed I. A. No. 9617/ 94 seeking leave to defend under Order XXXVI Rule 3 (5) Civil
