- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO.571 OF 2007 IN SUMMONS FOR JUDGMENT NO.358 OF 2006 IN SUMMARY SUIT NO.1186 OF 2006 Mr.S.Nageshwar Rao, ) India Inhabitant, carrying on ) busines as Proprietor in the ) name and style of M/s.Sri Durga ) Automotive, 50/800, A-114, ) Gooty Road, Kurnool - 518 002. ) Andhra Pradesh. ).. Appellant (Org. Defendant) Versus Mahindra & Mahindra Ltd., ) a Company incorporated ) under the Indian Companies ) Act, 1923, and having its ) registered office at ) Gateway Building, ) Appollo Bandar, ) Mumbai - 400 001. ).. Respondent (Org.Plaintiff) -- S/Shri J.P.Cama, Sr.Counsel, with R.J.Cama, Advocate, i/b Mukesh Aiya & T. Raja Ram Mohan Roy, Advocates, for the Appellant. Shri K.H.Mody, Advocate, i/b J.M.B.Partners, Advocates, for the Respondent. -- CORAM : SRI R.M.S.KHANDEPARKAR & SRI P.B.MAJMUDAR, JJ DATED : 5TH MAY, 2008 - 2 - ORAL ORDER : ( Per Sri R.M.S.KHANDEPARKAR, J ) ORAL ORDER : ( Per Sri R.M.S.KHANDEPARKAR, J ) ORAL ORDER : ( Per Sri R.M.S.KHANDEPARKAR, J ) 1. Heard. This appeal arises from the order dated 6th December, 2006 passed in Summons For Judgment No.358 of 2006 in Summary Suit No.1186 of 2006. By the impugned order, the summary suit filed by the respondent-plaintiff for recovery of amount of Rs.3,65,36,285/- along with interest has been allowed. The impugned order is sought to be challenged on three grounds. Firstly on the ground that the learned Single Judge failed to consider that the appellant-defendant has raised a triable issue in the case sufficient to grant leave to defend the suit, at least on the conditions which could have been imposed while granting leave. However, there is no case for refusal of leave to defend. Secondly on the ground that there is no consistency in the amount claimed by the respondent, and at different stages as well as in the affidavit in reply at different places, different amount has been claimed as due and payable by the appellant which itself is sufficient to disclose inconsistency in the claim of the plaintiff and the justification for grant the leave to the appellant to defend the suit. Thirdly on the ground that the letter dated 8th August, 2003 which is considered as - 3 - an acknowledgment of the liability by the appellant has been relied upon by the learned Single Judge without considering inherent inconsistency in the contents of the said letter which would reveal that there was no justifiable ground for the appellant to issue the alleged confirmation of any liability towards the respondent in the month of August, 2003 and in that regard, heavy reliance is sought to be placed on the statement by the respondent in its affidavit dated 29th August, 2006 filed before the learned Single Judge wherein the respondent had stated that the agreement for dealership had come to an end on 31st December, 2002. It is also sought to be contended on behalf of the appellant that the entire cause of action arose in Andhra Pradesh and, therefore, the suit could not have been entertained by this Court. It was also sought to be contended that the alleged confirmation of the liability apparently is contrary to the record inasmuch as that the appellant had no occasion to issue any such confirmation in view of the fact that already the blank cheques were forwarded towards the installments which were yet to fall due even after 8th August, 2003 and, therefore, there was no occasion for the appellant to issue the alleged confirmation letter. - 4 - 2. The learned senior counsel appearing for the appellant has sought to rely upon the decisions of the Apex Court in M/s.Mechalec Engineers & Manufacturers M/s.Mechalec Engineers & Manufacturers M/s.Mechalec Engineers & Manufacturers v. M/s.Basic Equipment Corporation, v. M/s.Basic Equipment Corporation, v. M/s.Basic Equipment Corporation, reported in AIR 1977 SC 577, Mrs.Raj Duggal v. Ramesh Kumar Bansal, Mrs.Raj Duggal v. Ramesh Kumar Bansal, Mrs.Raj Duggal v. Ramesh Kumar Bansal, reported in AIR 1990 SC 2218, and in M/s.Sunil M/s.Sunil M/s.Sunil Enterprises & Anr. v. SBI Commercial and Enterprises & Anr. v. SBI Commercial and Enterprises & Anr. v. SBI Commercial and International Bank Ltd., International Bank Ltd., International Bank Ltd., reported in AIR 1998 SC 2317. 3. Plain reading of the impugned order discloses that the learned Single Judge, after taking into consideration all the materials before it, has clearly observed that the defence which was sought to be raised on behalf of the appellant to the claim putforth by the respondent was that the entire amount due and payable was already paid before 31st December, 2002 and yet there was no explanation coming forward in relation to the letter dated 8th August, 2003 which was obviously issued much after 31st December, 2002, and the said letter clearly discloses acknowledgement of the liability as on 31st July, 2003. There is absolutely no dispute sought to be raised in respect of the said letter at any point of time and even in the course of lengthy arguments advanced by the learned senior counsel for the appellant. He had not even attempted to give any explanation in relation to - 5 - the letter dated 8th August, 2003 which clearly discloses acknowledgment of liability to the respondent by the appellant as on 31st July, 2003, when it was the case of the appellant himself that the entire amount due and payable to the respondent was paid prior to 31st December, 2002. We find no infirmity in the findings arrived at by the learned Single Judge regarding the falsity of the claim that the entire amount due and payable to the respondent was paid by the appellant prior to 31st December, 2002 in view of the letter dated 8th August, 2003 disclosing acknowledgment of the liability to the tune of Rs.2,53,60,333.95 ps. as on 31st July, 2003. Without any explanation in relation to the said acknowledgement, it discloses that the appellant has no defence to the claim putforth by the respondent. Indeed, the said finding is clearly borne out from the record and further discloses that the alleged defence which is sought to be raised is apparently dishonest. 4. In the affidavit in reply filed by the appellant before the learned Single Judge in paragraph 5 thereof, he has clearly stated that "I say that the plaintiff stopped the supply of goods from 01.04.2003 without assigning any reason and without any negotiations. .....................". In the - 6 - paragraph 6 thereof, it has been stated that "I say that the plaintiff also stopped supply of vehicles from 01.04.2003 and .................". In the paragraph 7 of the said affidavit in reply, it has been further stated that ".................I say that all the amounts due and payable by the defendant the plaintiff prior to 31.12.2002 were paid and settled and no amount was due to the plaintiff. I also say that I had issued blank cheques to the plaintiff as further installments and for the purpose of security in 2002........................". 5. The above statements clearly disclose that though the dealership agreement was put to an end by 31st December, 2002, it is the case of the appellant himself that there were supplies made even after 31st December, 2002 and upto to 1st April, 2003. This obviously discloses that the appellant was required to make payment in relation to the supplies made after 31st December, 2002 to the respondent. There is not a whisper in the affidavit about any such payment having been made at any point of time after 1st April, 2003 to the respondent. On the contrary, the categorical assertion on the part of the appellant in the paragraph 7 of the said affidavit in reply is that whatever amount is due and payable was cleared by 31st - 7 - December, 2002. If the amount due and payable to the respondent was cleared by 31st December, 2002, then failure to explain in the said affidavit in reply about the payment in relation to the supplies made thereafter coupled with the detail account submitted by the respondent/plaintiff in the affidavit and more particularly in the paragraph 5 thereof discloses even the claim of the appellant that he had forwarded blank cheques towards the security is far from the truth. The paragraph 5 of the affidavit of the applicant before the learned Single Judge which discloses clear admission of fact that the goods were supplied till 31st March, 2003, reads thus:- "I say that the plaintiff stopped the supply of goods from 01.04.2003 without assigning any reason and without any negotiations." 6. The Apex Court in M/s.Basic Equipment M/s.Basic Equipment M/s.Basic Equipment Corporation’s case (supra), Corporation’s case (supra), Corporation’s case (supra), after referring its earlier decision in Santosh Kumar v. Bhai Mool Singh, Santosh Kumar v. Bhai Mool Singh, Santosh Kumar v. Bhai Mool Singh, reported in AIR 1958 SC 321, as well as referring to the other decisions which are noted in the paragraph 6 of the said decision, held that "We do not think that it is fair to pronounce a categorical opinion on such a matter before the evidence of the parties is taken - 8 - so that its effects could be examined. In the case before us, the defendant had denied, inter alia, liability to pay anything to the plaintiff for an alleged supply of goods. It is only in cases where the defence is patently dishonest or so unreasonable that it could not reasonably be expected to succeed that the exercise of discretion by the trial court to grant leave unconditionally may be questioned." This coupled with the paragraph 4 of the said decision clearly discloses that the Apex Court was dealing with a case wherein the trial Court had exercised its discretion to grant unconditional leave to defend the suit. It was not a case wherein the trial Court had refused the leave to defend. It is settled law that the rulings and the observations by the Court are to be understood in the facts of the case and the questions which arise for determination in that case. 7. The Apex Court in M/s.Basic Equipment M/s.Basic Equipment M/s.Basic Equipment Corporation’s case (supra) Corporation’s case (supra) Corporation’s case (supra) has further referred to a decision of the Calcutta High Court with approval wherein certain propositions of law were laid down to be followed while dealing with the matter in relation to the grant or refusal of leave to defend the suit. The clauses (c) and (d) of those propositions read thus:- - 9 - "(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 clear that he had a defence, yet, shews such a state of facts as leads to the interference that at the trial of the action he may be able to establish a defence 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 defence or the defence 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." Referring to the above propositions, it was sought to be contended that the defence sought to be raised by the appellant was not illusory or sham and it - 10 - disclosed necessary facts which were sufficient to infer that at the trial of action the the appellant would be able to establish his defence. The appellant having in no uncertain terms admitted the liability of certain amount on 8th August, 2003 as being due and payable to the respondent and at the same time has contended that the amount due and payable was already paid by 31st December, 2002 to the respondent, one fails to understand what further material the appellant would be able to place before the Court so as to make out a defence to the respondent’s claim. In the above disclosed set of facts, we are of the considered opinion that there are no facts placed on record which could by any stretch of imagination help to infer that at the trial of action the appellant would be able to establish any defence to the respondent’s claim. In fact, the defence set up is totally illusory and sham and thoroughly inconsistent. At one stage the appellant contends that the entire amount was already paid by 31st December, 2002 and at another stage he does not dispute that there was a letter executed by the appellant on 8th August, 2003 acknowledging the subsisting liability to the respondent to the tune of Rs.2,53,60,333.95 ps. and yet does not furnish any explanation for executing such acknowledgement letter. In these circumstances, - 11 - we find that there is absolutely no defence disclosed by the appellant to the claim putforth by the respondent. 8. The Apex Court in M/s. Basic Equipment M/s. Basic Equipment M/s. Basic Equipment Corporation’s case (supra) Corporation’s case (supra) Corporation’s case (supra) was dealing with a case as to whether the High Court was justified in interfering with the discretion exercised by the trial Court in the grant unconditional leave to defend the suit by the defendant. In that regard, the Apex Court had observed that the defendant had denied the liability to pay anything to the plaintiff for the alleged supply of goods. In other words, there was not only a dispute raised regarding the liability to pay the amount but even a dispute was raised in relation to the claim made by the plaintiff about supply of goods. The expression "alleged supply of goods" clearly discloses that the factum of supply of goods itself was in dispute in the said case. In the circumstances, therefore, there were facts available on record which could be sufficient to infer that at the trial of the suit the defendant could be able to establish his defence to the plaintiff’s claim. That is not the case in hand and the learned Single Judge, after going through the record, has found that there is no defence as such for the appellant to the claim - 12 - putforth by the respondent and, therefore, has refused to exercise the discretion for grant of leave to defend the suit. 9. The Apex Court in M/s.Sunil Enterprises’s case M/s.Sunil Enterprises’s case M/s.Sunil Enterprises’s case (supra) (supra) (supra) was dealing with a matter wherein the bills of exchange were accepted by the respondent even though they had already discharged earlier. It was sought to be contended that some of the bills of exchange were mere secondary documents and, therefore, those matters required examination. It was in those circumstance the Apex Court observed that it was not possible to hold that the defence raised by the party was totally defenceless or moonshine or illusory. That is not the matter in the case in hand, for the reasons stated above. 10. In M/s.Raj Duggal’s case (supra), M/s.Raj Duggal’s case (supra), M/s.Raj Duggal’s case (supra), the Apex Court has held that leave is to be declined where the Courts form an opinion that the grant of leave would merely enable the defendant to prolong the litigation by raising untenable and frivolous defences and the test is to see whether the defence raises a real issue and not a sham one, in the sense that if the facts alleged by the defendant are established, there would be a good or even a plausible defence on those facts. - 13 - 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. It was also held that where the defendant shows that even on a fair probability, he has a bona fide defence, he ought to have leave. The Court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency. It was further observed that where the defence can be described as more than "shadowy" but less than "probable" leave to defend should be given. Applying the said law to the facts of the case, it would at once apparent that the appellant having clearly admitted the fact that till 31st December, 2002 he owed money to the respondent but the said liability was cleared by that date and at the same time having acknowledged the liability for more than two crores on 8th August, 2003, there could be no fact as such to be established by the appellant which could reveal even a plausible defence as such to the claim putforth by the respondent against the appellant. There is no triable issue to be tried in the sense that it could be said - 14 - that there is any dispute about any document as such. The very document dated 8th August, 2003 on which the respondent has placed heavy reliance to show the liability of the appellant to the respondent has neither been explained nor disputed by the appellant. Undoubtedly, some oral arguments were sought to be advanced in the course of hearing of the appeal on behalf of the appellant in relation to the said document. However, mere submission cannot have any meaning unless factual foundation necessary to substantiate the submission is laid down in the pleadings of the parties. Admittedly, there is no explanation given by the appellant in relation to the said acknowledgement letter in the affidavit filed by the appellant before the learned Single Judge. It is also undisputed fact that the said letter has not been disputed by the appellant in the affidavit filed by the appellant before the learned Single Judge. In the circumstances, it cannot be said that there is any triable issue in relation to the said document. It is not a matter of mere implausibility or its inconsistency in the alleged defence sought to be raised by the appellant. Infact, for the reasons stated above, it lacks bona fide and, therefore, no fault can be found with the impugned order rejecting the leave to defend. - 15 - 11. In relation to the alleged blank cheques, records disclose that appropriate notice in terms of the provisions of Section 138 of the Negotiable Instrument Act was issued to the appellant. No dispute was sought to be raised of the nature which is now sought to be contended on behalf of the appellant in answer to the said notice. This clearly discloses that the contention which is now sought to be raised that the blank cheques were given by way of security is nothing but an after thought. 12. After conclusion of the arguments, when it was made clear to the learned counsel for the appellant that we are not inclined to allow the appeal and are rather inclined to dismiss it, and that if the appellant wants to withdraw the appeal, he could do so, it was then sought to be contended on behalf of the appellant that the learned Single Judge also did not consider the fact that the entire cause of action arose within the State of Andhra Pradesh and no cause of action arose within the territorial jurisdiction of this Court. To the specific query as to whether such a point was ever raised before the learned Single Judge, our attention was sought to be drawn to the paragraph 9(f) of the affidavit in reply filed before - 16 - the learned Single Judge, which reads thus:- "With reference to para 12, 13 and 14, I deny that by the present suit in the plaintiff seeks only to recover money payable by the Defendants to the plaintiff and hence the suit is covered under Order XXXVII rule 2 of the Code of Civil procedure, 1908 and no claim outside the purview of the said rule is subject matter of the said suit. I say that the plaintiff claim in fact cannot be said to be for the recovery of money payable by the Defendant and hence the subject matter of the suit is outside the purview of the provisions of Order XXXVII rule 2." 13. Plain reading of the above quoted paragraph would disclose that nowhere the issue regarding absence of territorial jurisdiction to the Court to entertain the suit was raised. Even otherwise, not a single fact which would reveal that the entire cause of action arose beyond the territorial jurisdiction of this Court was ever pleaded. 14. Since no other point has been canvassed in the matter, we find no reason to interfere in the impugned - 17 - order. The appeal, in our considered opinion, is mere a waste of time and deserves to be dismissed in limine with costs. 15. The appeal accordingly is hereby dismissed with cost of Rs.10,000/- to be deposited in the Registry within a period of ten weeks from today. The costs being deposited, the same shall be credited to the account of Maharashtra State Legal Services Authority. (R.M.S.KHANDEPARKAR, J) (P.B.MAJMUDAR, J )