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2015 Supreme(Del) 2707
IN THE HIGH COURT OF DELHI
VALMIKI J.MEHTA, J.
GE Capital Services India - Plaintiff
Versus
K.M. Veerappa Reddy & Ors. - Defendants
CS(OS) No. 2552/2011
Decided On : 16-11-2015
For the Plaintiffs :Ms. Deepika V. Marwaha, Ms. Worthing Kasar, Mr. Vaibhav Asthana and Mr. Atul Bansal, Advocates
For the Defendants :Mr. Ankit Jain, Advocate for D-1, Mr. D.P. Chaturvedi, Adv. for D-2, Mr. Lalit Gupta, Mr. Ashish Kumar and Ms. Payal Gupta, Advocates for D-3
Headnote:
ORDER XXXVII CPC - SUIT FOR RECOVERY OF MONEY - MAINTAINABILITY - BALANCE DUE AT THE FOOT OF THE ACCOUNT - WRITTEN CONTRACT - LIQUIDATED AMOUNT - LEAVE TO DEFEND APPLICATIONS - CONDITIONS - COSTS.
Fact of the Case:
Plaintiff filed a suit under Order XXXVII CPC for recovery of Rs.1,06,89,531.40. The suit was based on eight loan agreements entered into between the plaintiff and the defendants in 2003 and 2004. The defendants stood as guarantors for the loans. In 2005, a Compromise Deed was entered into between the parties, rescheduling the payments. The plaintiff claimed that as on 25.9.2005, a sum of Rs.1,30,00,000/- was due to the plaintiff. The plaintiff further claimed that as per the statements of accounts of ‘two agreements’, a total sum of Rs.1,19,58,688.94 was due to the plaintiff including TDS dues. From this amount, an amount of Rs. 8,00,000/- and a further amount of Rs.4,69,157.52 were reduced, and hence the suit amount was claimed to be Rs.1,06,89,531.40.
Finding of the Court:
The court held that the suit was not maintainable under Order XXXVII CPC. The court observed that the object of Order XXXVII CPC was to allow filing of suits for recovery of debts or liquidated demands arising on a written contract. The suit amount in the present case was not a liquidated amount arising from a written contract. The amount claimed in the suit was the balance due at the foot of the account, which was not supported by any written document admitting such liability to be payable. The court also noted that the plaintiff had filed a similar suit earlier, which was also held to be not maintainable under Order XXXVII CPC. The court allowed the leave to defend applications and directed the suit to be treated as an ordinary suit. The court imposed costs of Rs.5 lacs on the plaintiff for contumaciously and obstinately pursuing the suit under Order XXXVII CPC.
Issues: Whether the suit was maintainable under Order XXXVII CPC.
Ratio Decidendi: A suit under Order XXXVII CPC is maintainable only for recovery of debts or liquidated demands arising on a written contract. The suit amount in the present case was not a liquidated amount arising from a written contract. The amount claimed in the suit was the balance due at the foot of the account, which was not supported by any written document admitting such liability to be payable.
Final Decision: The leave to defend applications were allowed and the suit was directed to be treated as an ordinary suit. The court imposed costs of Rs.5 lacs on the plaintiff for contumaciously and obstinately pursuing the suit under Order XXXVII CPC.
VALMIKI J. MEHTA, J.
I.A.Nos.3586/2013 (U/o XXXVII R 3(5) CPC), 16124/2013 (U/o XXXVII R 3(5) CPC), 3116/2014(U/o VII R 11 CPC) & 10097/2015 (U/o XXXVII R 3(5) CPC)
1. By this Order I am disposing of the three leave to defend applications filed by the defendant nos.1 to 3 in the suit. Leave to defend applications are under Order XXXVII Rule 3 sub-Rule 5 of the Code of Civil Procedure, 1908 (CPC). The suit is a suit for recovery of Rs.1,06,89,531.40.
2. Before I turn to the facts of the present case, and pass the present order allowing the leave to defend applications, I must mention certain disturbing and disconcerting facts. It is found that in many cases, which come up in this Court, though the cases are pleaded to have been filed as falling under Order XXXVII CPC, ex facie, the suits ought not to have been filed by these litigants under Order XXXVII CPC. Filing of suits as Order XXXVII suits, though the same are not covered under Order XXXVII CPC result in wastage of precious judicial time, and which in this case has stretched to about four years and around two dozen dates of hearings. It is high time that this unacceptable practice must be stopped.
3. What is Order XXXVII CPC and what are the suits which are filed under Order XXXVII CPC? Order XXXVII CPC was enacted as an exception to the normal procedure under our Constitution and Civil laws, viz of following the principles of natural justice that a suit has to be decided in accordance with law by allowing a defendant an automatic right to defend the suit, and once there are disputed questions of fact both the parties would lead evidence on the factual issues framed. Once there would be various factual issues which require adjudication and determination, an ordinary civil suit has to be filed and decided as per the ordinary procedure provided in CPC. Order XXXVII CPC was carved out as an exception to the general rule of following the principles of natural justice, because, the subject matter of the said provision deals with are written instruments which on their fact ex facie show existence of liability of the defendants, and such instruments being dishonoured cheques, a written contract of guarantee, or a written contract obliging payment of liquidated amounts. Once such documents existed, which clearly showed prima facie liability of the defendants and an obligation of the defendants to pay such amounts, suits are filed under the exceptional procedure of Order XXXVII CPC that a defendant is not allowed as per the principles of natural justice to automatically contest the suit and the defendants have a right to contest the suit only if they apply and are granted leave to defend the suit on the leave to defend application being filed and allowed. Specific amounts given in the written instruments, therefore, once shown as due and payable by the said written instruments, benefit was given to a person in whose favour the instruments were executed, to file the suits under the special procedure of Order XXXVII CPC. It was never the intention of the framers of Order XXXVII CPC that amounts which have to be arrived at by looking at different documents, different transactions over different dates, entries in the statement of accounts and various other facts so as to arrive at the amounts due which are claimed in the suit, can be claimed by filing an Order XXXVII suit. The object of Order XXXVII CPC is clear and categorical that the amount claimed arises directly and only from a written instrument. Therefore, the applicability of the Order XXXVII CPC cannot be misused by litigants to file a suit which requires the court to go into various documentation, different amounts in different documentation, different amounts in different documentation of different years and periods, and examining the statement of accounts containing balances due which are different than the am
