The main legal point established in the judgment is the interpretation of written contracts and guarantees under Order XXXVII CPC, and the rejection of frivolous defenses raised by the defendant.

Valmiki J. Mehta, J.

I.A. No. 6165/2010 (under Order XXXVII Rule 3(5) CPC for grant of leave to defend)

1. This application for leave to defend is filed by the defendants under Order XXXVII Rule 3(5) of the Code of Civil Procedure, 1908 (CPC). There are a total of four defendants in the suit. Defendant no.1/company is under liquidation, and therefore, counsel for the plaintiff does not press the suit against defendant no.1 but seeks and is granted liberty to file appropriate claims before the official liquidator, and accordingly, the suit will stand disposed of giving the aforesaid liberty to the plaintiff as regards the defendant no.1. Counsel for the plaintiff also prays for deletion of defendant nos. 3 and 4 from the array of defendants as no decree is sought against these defendants. Ordered accordingly. The leave to defend application is therefore to be decided with respect to the rights of the plaintiff in this Order XXXVII suit as regards the defendant no.2, and which defendant no.2 as per the plaintiff was the dramatis personae with respect to the entire transactions and dealings between the parties.

2. By this suit filed under Order XXXVII CPC, plaintiff seeks recovery of Rs.6,90,26,340/- alongwith pendente lite and future interest at 24% per annum. Though the plaint sets out the entire history of transactions between the parties and which started from the year 2002, and which transactions were pertaining to the loans granted by the plaintiff to the family concerns of defendant no.2, the paras 8 to 23 of the plaint containing only historical facts of various payments due to the plaintiff, issuing of cheques and dishonouring of the same, filing of cases under Section 138 of the Negotiable Instruments Act, 1881 (hereinafter referred to as “the NI Act”) etc are irrelevant inasmuch as the cause of action on the basis of which decree is sought in the present suit is on the basis of a later Corporate Guarantee given by the defendant no.1 on 4.9.2006 and with respect to which the defendant no.2 stood as a personal guarantor to repay the amount as stated in the corporate guarantee. The details as to the dues payable by the defendants to the plaintiff and cheques issued by the defendants to the plaintiff are stated in paras 24 to 26 of the suit plaint and these paras 24 to 26 read as under:-

“24. Thereafter the Defendant No.1 and Defendant No.2’s family H.U.F. i.e. M/s RL Varma HUF, and its karta, members and co-Parcenors (which included the Defendant No.2) arranged for a fresh corporate guarantee dated September 4, 2006 (third guarantee), from Defendant No.1, wherein Defendant No.1 guaranteed the payments on behalf of the Defendant No.2’s family H.U.F. i.e. M/s RL Varma HUF, and its karta, members and co-Parcenors (which included the Defendant No.2). The Defendant No.1 agreed to guarantee and pay an amount of Rs.5,14,00,000/- (Rupees Five Crores And Fourteen Lacs Only), plus an additional amount of interest of Rs.2,01,26,340/- (Rupees Two Crores One Lac Twenty Six Thousand Three Hundred And Forty Only) in all amounting to Rs.7,15,26,340/- (Rupees Seven Crores Fifteen Lacs Twenty Six Thousand Three Hundred And Forty Only) in instalments between 1.4.2006 to 31.3.2007. In the aforesaid corporate guarantee dated September 4 2006, which was issued by Defendant No.1, it was also recorded that to secure the payments, which are payable, the Defendant No.1 has handed over cheques amounting to Rs.7,15,26,340/- to Plaintiff as per the following details: