Vikramajit Sen, J.
IAs No. 8435-36/2002
1. The interpretation imparted to Order xxxvII of the CPC by the Hon''ble Supreme Court a quarter century ago, in
"8 ... (a) If the defendant satisfies the Court that he has a good defense to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend.
(b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defense although not a positively good defense the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.
(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he had a defense, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defense to the plaintiff''s claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into court or furnishing security.
(d) If the defendant has no defense or the defense set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
(e) If the defendant has no defense or the defense is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defense to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defense."
2. In
"Leave is declined where the Court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defenses. The test is to see whether the defense raises a real issue and not a sham one, in the sense that if the facts alleged by the defendant are established here would be a good or even a plausible defense on those facts. If the Court is satisfied about that leave must be given. If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based or uncertainty as to the amount actually due or where the alleged facts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross-examine his witnesses leave should not be denied. Where also, the defendant shows that even on a fair probability he has a bona fide defense, he ought to have leave. Summary judgments under Order 37 should not be granted where serious conflict as to matter of fact or where any difficulty on issues as to law arises. The Court should not reject the defense of the defendant merely because of its inherent implausibility or its inconsistency."
3. In its earlier judgment in
4. The present Suit has been filed under Order xxxvII of the CPC for recovery of sum of Rs. 21,75,000/-. A collaboration agreement was entered into on 23.9.1994 between the parties in terms of which the plaintiff paid a sum of Rs. 47,00,000/- to the Defendant as consideration for the sale of the entire first and second floor of the building proposed to be constructed on the plot bearing No. B-111, Greater Kailash, New Delhi. The building was duly completed by 15.7.1999 at which point an Agreement to Sell was executed by the parties whereby the basement was to be sold by the Defendant to the plaintiff for Rs. 60,00,000/-. An advance of Rs. 6,00,000/- was given on that date. The liabilities to the Indian Bank were to be discharged by the Defendant from the balance Rs. 54,00,000/- The allegation is that the Defendant had put a third party in the said basement and, Therefore, the agreement for the purchase of basement was transferred to the rights over the third floor. The advance of Rs. 6,00,000/- was adjusted against this Agreement. On the Malhotra Committee Report being published, a Memorandum of Understanding-cum- Supplementary Agreement was thereupon entered into between the parties, the terms of which were that two flats comprising of four bedrooms were to be constructed on the third floor. The front flat was to belong to the Defendant, whereas the plaintiff was entitled to the rear flat. A further sum of Rs. 9,00,000/- was paid by the plaintiff to the Defendant to cover the cost of construction. It is stated that yet another Memorandum of Understanding was executed on 24.11.1999 in terms of which Rs. 6,00,000/-, being advance towards the basement, was to be returned to the plaintiff within 90 days. It has then been pleaded that the Malhotra Committee Report could not be given effect to because of an injunction passed by the Hon''ble Supreme Court prohibiting construction on the third floor. It is in this background that the Agreement dated 24.11.1999 is maintained by the plaintiff to have become incapable of performance. The contract having been frustrated the Defendant became liable to refund the sum of Rs. 15,00,000/-.
5. In the application seeking Leave to Defend a number of technical objections have been raised to which I shall revert later. Learned counsel for the Defendant has emphasised that at the time when the agreement was entered into in respect of the terrace and two floors to be constructed on the third floor, this construction was legal and permissible. It is also stated that Rs. 9,00,000/- was specifically agreed to be non-refundable and that the work was to commence immediately. The impediment in the construction occurred after the lapse of considerable time, and for this period no Explanation has been disclosed which would justify the shutting out of the defense. It has also been contended that because of this delay the Defendant has lost the valuable right and enjoyment over one flat which was to be constructed on the third floor and was permissible when the agreement was entered into. The argument on behalf of Defendant is also that had the construction been carried out in terms of the agreement between the parties, it would have been completed by the time the Malhotra Committee Report had been injuncted. In my considered opinion all these grounds raise triable issues. The defenses are not moonshine.
6. The following cases have been cited by learned counsel for the plaintiff, but I find them to be of no avail at this stage of the litigation:
7. It has also been contended on behalf of Defendant that the plaint should be taken off the record, as there has been no compliance with Section 26 of the CPC inasmuch as the facts have not been affirmed by an affidavit filed along with the plaint. Reliance is also placed on Order VII Rule 11 for the rejection of the plaint for the reason that the plaint has not been filed in duplicate. These objections have been sought to be removed by the filing of a duplicate plaint as well as a detailed affidavit. While it would not serve the ends of justice to reject the plaint on these technical non-conformance of procedural provisions, it would also be inappropriate to overlook them at the critical stage of determining whether a defense to the plaint has been disclosed. Non compliance with mandatory legal provisions must result at least in the grant of Leave to Defend the Suit; it is so granted.
8. The duplicate of the plaint, as well as the affidavit which are now available on the record are, however, taken on record and IAs No. 8435/2002 & 8436/2002 are disposed of in these terms.
IA No. 6143/2002
9. Interim Orders passed on 19.7.2002 are confirmed. The fact that the Defendant had entered into a contract in respect of the Basement and had received an advance cannot be lost sight of. The plaintiff has averred and argued that a tenant was inducted thereafter. Even if this is not accepted, it is scarcely believable that the plaintiffs were notified that the property which was being purchased for valuable consideration was occupied. The bonafides of the Defendant on this aspect of the dispute are not free from suspicion. The Defendant is directed to maintain status quo in respect of the basement of the suit property during the pendency of the litigation.
10. Application stands disposed of.
Suit No. 1167/2002
11. Written Statement be filed within four weeks. Replication be filed within two weeks thereafter. Parties may file additional documents, if any, in original.
12. Renotify the matter before the Joint Registrar for admission/denial of documents on 14.7.2003 and before the Court as per roster for framing of Issues on 28.7.2003.
