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2023 Supreme(Online)(Del) 19694
CS(COMM) 154/2022 Page 1 of 13
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IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 29th November, 2023.
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CS(COMM) 154/2022 & I.As. 3888/2022, 3889/2022
M R PIPES PVT LTD
..... Plaintiff
Through:
Mr. Rajesh Mahendru, Advocate.
versus
RCC ECO BUILD SYSTEMS LTD
..... Defendant
Through:
Ms. Amrita Panda, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
The legal framework for granting leave to defend in summary suits is predicated on the nature and strength of the defence presented by the defendant.
Headnote:
ORDER XXXVII - SUMMARY SUITS - LEAVE TO DEFEND - [COMMERCIAL COURTS ACT, 2015]The Court, while dealing with a monetary suit under Order XXXVII of the Code of Civil Procedure, 1908, raising a commercial dispute under Section 2(1)(c) of the Commercial Courts Act, 2015 for unpaid sale of goods, held that the Defendant should not be afforded an opportunity to defend the suit and dismissed the application seeking leave to defend.
Fact of the Case:
The Plaintiff, a company engaged in the business of distribution and sale of steel pipes, shuttering and other material, filed a suit against the Defendant for unpaid sale of goods. The Plaintiff had supplied goods valued at Rs. 1,53,65,785/- to the Defendant, however, no payments were received despite repeated requests and reminders. Subsequently, the Defendant issued a Cheque bearing no. 000610 dated 30th May, 2019, for Rs. 1,53,65,785/- drawn on HDFC Bank, Gurgaon, in favour of the Plaintiff, at the Plaintiff’s office in Delhi. However, the cheque was subsequently dishonoured due to ‘insufficient funds’ when presented for payment on 31st May, 2019.The Defendant entered appearance in the time stipulated under the provisions of Order XXXVII of CPC and applied seeking leave to defend the instant under Order XXXVII Rule 3(5) of CPC raising certain triable issues and certain jurisdictional objections on maintainability.
Finding of the Court:
The Court found that the Defendant’s defence was without merit and appeared to be a post-facto fabrication rather than a genuine grievance. The combined weight of the absence of timely formal complaints, availing of GST input tax credits without reservations, and the lack of consistent communication regarding alleged defects or short supply, lead to the inevitable conclusion that the plea of defective and short-supply was a sham. Therefore, the Court found no triable issue in the Defendant’s claims and rejected their contentions as unfounded.
Issues: 1. Whether the Defendant should be granted leave to defend the suit?2. Whether the Court has territorial jurisdiction to entertain the suit?3. Whether the suit is barred by limitation?
Ratio Decidendi: 1. The legal framework for granting leave to defend in summary suits is predicated on the nature and strength of the defence presented by the defendant.2. The Court has territorial jurisdiction to entertain the suit as a portion of the cause of action has indeed arisen within the territorial confines of this Court, thereby providing a foundational basis for jurisdiction.3. The suit is not barred by limitation as the cheque in-question, for payment towards the outstanding dues, was dishonoured on 31st May, 2019 and the suit was filed within the period of limitation calculated from the said date.
Final Decision: The Court dismissed the Defendant’s application seeking leave to defend and decreed the suit in favour of the Plaintiff and against the Defendant for an amount of Rs. 2,28,56,604/-.
SANJEEV NARULA, J. (Oral):
I.A. 5968/2022 (u/Order XXXVII Rule 3(5) of the Code of Civil Procedure,
1908, for leave to defend the captioned suit)
1.
This judgment deals with a monetary suit under Order XXXVII of Code
of Civil Procedure, 1908 [hereinafter “CPC”] raising a commercial dispute
under Section 2(1)(c) of Commercial Courts Act, 2015 for unpaid sale of
goods. On 10th March, 2022, this Court issued summons and concurrently
passed an interim order restraining creation of third-party rights on two
properties of the Defendant located in Agra. Upon summons being served, the
Defendant entered appearance in the time stipulated under the provisions of
Order XXXVII of CPC. On 05th April, 2022, this Court directed for issuance
of summons for judgment to the Defendant in Form 4A of Appendix B of
CPC. In response, Defendant has applied seeking leave to defend the instant
under Order XXXVII Rule 3(5) of CPC raising certain triable issues and
Digitally Signed
By:AKANSHA SINGH
Signing Date:10.12.2023
21:57:16
Signature Not Verified
CS(COMM) 154/2022 Page 2 of 13
certain jurisdictional objections on maintainability. This judgment shall
ascertain if the Defendant should be afforded an opportunity to defend the suit
and if any conditions are required to be imposed.
BACKGROUND AND PLAINTIFF’S CONTENTIONS:
2.
The background facts and Plaintiff’s contentions emerging from the
plaint are as under:
2.1.
The Plaintiff is a company engaged in the business of distribution and
sale of steel pipes, shuttering and other material. They are a distributor of APL
Apollo Tubes Ltd., who are the original equipment manufacturers of various
pipes and tubes. In the month of November, 2018, Defendant placed orders
for purchase of ‘M S Pipes & Tubes’ of various descriptions against which
supplies were made. The details of invoices raised by the Plaintiff on the
Defendant for the period from 14th November, 2018 to 16th January, 2019 have
been listed in paragraph no. 4 of the plaint and are extracted hereinbelow:
“S.N.
INVOICE NO.
DATED
AMOUNT
1.
309
14.11.2018
RS.11,40,576/-
2.
310
14.11.2018
RS.11,13,539/-
3.
316
17.11.2018
RS.8,99,160/-
4.
347
07.12.2018
RS.8,97,390/-
4.
353
11.12.2018
RS.9,79,636/-
6.
363
15.12.2018
RS.14,23,552/-
7.
364
15.12.2018
RS.14,24,921/-
8.
381
25.12.2018
RS.11,73,864/-
9.
382
25.12.2018
RS.11,92,307 /-
10.
387
29.12.2018
RS.11,00,965/-
11.
388
29.12.2018
RS.2,69,740/-
12.
389
29.12.2018
RS.8,34,369/-
Digitally Signed
By:AKANSHA SINGH
Signing Date:10.12.2023
21:57:16
Signature Not Verified
CS(COMM) 154/2022 Page 3 of 13
13.
395
07.01.2019
RS.1,91,426/-
14.
396
07.01.2019
RS.12,40,239/-
15.
405
16.01.2019
RS.14.84,101/-
Total
RS.1,53,65,785/-”
2.2.
The Plaintiff supplied the goods valued at Rs.1,53,65,785/- to the
Defendant, however, no payments were received despite repeated requests
and reminders. Subsequently, the Defendant issued a Cheque bearing no.
000610 dated 30th May, 2019, for Rs.1,53,65,785/- drawn on HDFC Bank,
Gurgaon, in favour of the Plaintiff, at the Plaintiff’s office in Delhi. However,
the cheque was subsequently dishonoured due to ‘insufficient funds’ when
presented for payment on 31st May, 2019.
2.3.
Upon being informed of the aforementioned circumstances, the
Defendant requested additional time to fulfil the payment obligation. In
response, the Plaintiff refrained from initiating criminal proceedings, aiming
to preserve their ongoing relationship. Nevertheless, it was mutually agreed
that the Defendants would incur an interest charge of 18% per annum on the
outstanding amount. This rate not only aligns with customary trade practices
but is also sanctioned under Sections 80 and 117 of the
