The court emphasized that granting leave to defend is the norm, and defendants must raise genuine triable issues; failure to do so may result in conditions for leave.

JUDGMENT :

TUSHAR RAO GEDELA, J.

1. Present appeal has been filed assailing the impugned order dated 08.04.2024 passed by the learned Single Judge in CS(OS) 619/2022 titled Chander Bhalla vs. Rajeev Bhatnagar filed by the appellant, vide which the application of the respondent under Order XXXVII Rule 3(5) Civil Procedure Code , 1908 (hereafter “ CPC ”) seeking leave to defend has been allowed, unconditionally.

2. The facts, shorn of unnecessary details and germane to the issue at hand and as collated from the appeal as well as the impugned order are as under:-

(a)It is the case of the appellant that the respondent is his distant relative who, being in dire need of funds, requested the appellant for a personal loan amounting to Rs.7.5 crores and offered to pay interest at 12% p.a. It is stated that the appellant advanced the said loan by RTGS and the cheques drawn on Kotak Mahindra Bank during the period from 12.12.2017 to 26.03.2019, which were duly encashed by the respondent. It is also stated that besides the said loan, the respondent had taken another loan of Rs.2.5 crores from the company of the appellant namely M/s. Grand Prix Engineering Pvt. Ltd. which is also outstanding and for which a separate suit had been filed.

(b)The respondent continued to make payments till the month of July, 2019. However, he started defaulting in repayment from the month of August, 2019 and further asked for subsequent loans, which was declined by the appellant in light of the non-payment of the outstanding amount of the previous loan. The respondent sought time till September, 2021 to repay the outstanding loan amount and the interest amount on the pretext of the then prevailing pandemic.

(c)Pursuant to above, it is asserted that the parties decided to put the terms of the oral loan into writing. Accordingly, a loan agreement dated 15.09.2021 was executed between the appellant and the  respondent whereby the respondent duly acknowledged the receipt of Rs.7.5 crores as personal loan on interest @ 12% p.a. from the appellant and the respondent further agreed in the said loan agreement that he would return the entire loan amount as and when demanded by the appellant within 90 days.

(d)It is alleged by the appellant that the respondent failed to make payment of the principal amount including interest as assured by him. Therefore, by way of an e-mail dated 24.01.2022, the appellant demanded return of the loan amount with the entire arrears of interest w.e.f. 01.08.2019. The appellant again vide letter dated 14.02.2022 demanded repayment of the entire loan amount, along with the interest which was duly replied to by the respondent vide email dated 15.02.2022, acknowledging the loan, however, the respondent did not make any payment.

(e)In his attempt to recover the money, the appellant vide email dated 03.05.2022 demanded repayment of the loan amount, along with the interest which was duly replied to by the respondent vide email dated 03.05.2022, thereby offering certain terms for settlement on the outstanding loan amount which would be applicable to both the loans advanced by the appellant and by the company in which the appellant is a Director i.e., M/s. Grand Prix Engineering Private Limited. However, the appellant as well as the company rejected the said proposal on the ground that the proposal did not include the amount due in arrears of interest and the repayment schedule spread over a period of five years.

(f) Thereafter, the respondent sent another email dated 06.05.2022 offering to make the payment of the loan amount without interest and in a span of 6 years, which was not agreed to by the appellant. Subsequently, the appellant approached pre-litigation mediation, during which the respondent gave unrealistic proposal