Full Judgment Text
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Reserved on: 27 August, 2018
th
Pronounced on: 07 September, 2018
+ CS(OS) 1451/2014
M/S SQUAR COMMUNICATIONS PVT LTD
..... Plaintiff
Through : Mr. Anil Sapra, Senior Advocate.
with Ms.Manjula Gandhi,
Mr.S.K.Gandhi, Mr.Aditya
Kapoor, Ms.Medha Tandon,
Mr.Shivanshu Kumar, Mr.Sarthak
Katyal and Mr.Jaideep, Advocates.
versus
IGNOU UNIVERSITY & ORS
..... Defendant
Through : Mr.Aly Mirza, Advocate.
CORAM:
HON'BLE MR. JUSTICE YOGESH KHANNA
YOGESH KHANNA, J.
IA No.8545/2016 & 4289/2017
1. IA No.8545/2016 is under Order XXXVII Rule 3(5) CPC, seeking
leave to defend the suit filed by the plaintiff against the defendant for
recovery of
1,21,61,339/-. IA No.4289/2017 is for seeking condonation
of delay of 7 days in moving IA No. 8545/2016. In view of reasons given
delay is condoned.
Page 1 of 13
CS(OS) No.1451/2014
2. This suit is for recovery of an amount of
1,21,61,339/- inclusive
of interest which has been calculated at the rate of 24 % per annum till
the date of filing of the present suit and for future interest at the rate of
24% per annum till realization. In addition, the plaintiff also seek
recovery of damages in the amount of
20 lakhs as compensation for the
loss of goodwill, harassment etc.
3. Admittedly, a suit under Order 37 can be instituted only when,
inter-alia, the same is to recover a debt or liquidated demand in money
payable by the defendant. The plaintiff therefore seeks to give up its
claim for damages and is well within its rights to do so as held in SICOM
Ltd. vs. Prashant S. Tanna and Others AIR 2004 Bombay 186 wherein
the Court held:
“28. In the circumstances, we summarise the answer to the reference
as follows:
The judgments in Randerian & Singh v. Indian Overseas Bank and
Hydraulic and General Engineering v. UCO Bank (1998) 1 L.J. 793
are overruled. The suit would be maintainable as a summary suit if it
falls within one of the classes of suits enumerated in Order XXXVII,
Rule 1(2) even if the claim made therein is not properly quantified or
is in excess of what the plaintiff is entitled to.
xxxx”
4. The defendant argues
(i) according to the case set up by the plaintiff, the defendant
approached the plaintiff for advertisement of the ceremony of
placing a foundation stone of Indian Sign Language Research
and Training Centre (ISLRTC), which was held on 4.10.2011 at
IGNOU Campus, Maidan Garhi, New Delhi. There is no record
of any offer letter having been written by the defendant to the
plaintiff and the plaintiff may be called upon to produce
documentary evidence in support of its allegation the
Page 2 of 13
CS(OS) No.1451/2014
University has approached the plaintiff for advertisement, as
alleged. In fact no such offer could have made at all;
(ii) it is alleged by the plaintiff the fees quotation/estimate for the
purpose of issuance of advertisement, as desired was submitted
to the University on 1.10.2011, which was approved by the then
Vice Chancellor Professor VNR Filial viz. Annexure B . The
plaintiff has filed only a copy thereof and from a perusal of the
said document it is not clear as to with whom the said estimate
was submitted and how it ended up before the then Vice
Chancellor without it being routed through proper channel. The
University does not have the original of this document in its
record. The so called estimate shows a figure of
1,40,92,187/-
and this is not the manner in which contracts running into
crores are awarded by the University. It is alleged, every time a
contract is awarded, the same in the first stage is proposed by
the concerned department/centre; the proposal is thereafter
reviewed and vetted by various committees, including financial
committee to look into the various aspects of the matter and
once the same has been approved, a proper tender is floated for
the purpose of inviting bids/quotations so that competitive
pricing can be achieved. In the present case there is no record as
to how and in what manner the plaintiff was approached by the
University and under what circumstances the estimate was
approved by the then Vice Chancellor on 3.10.2011; and
(iii) the payment already made to the plaintiff cannot be justified
under the circumstances as the University is the custodian of
Page 3 of 13
CS(OS) No.1451/2014
State largesse which receives grants from the MHRD and its
accounts are audited by the Comptroller General of India and
presented before the Parliament. The award of the agreement to
the plaintiff, the payments already made thereunder constitutes
a financial irregularity of such magnitude that it warrants a
criminal investigation in the matter to fix culpable
responsibility as the action of awarding the tender to the
plaintiff, when it was the only bidder, was improper and illegal.
5. In its application for leave to defend the defendant, primarily, has
argued (a) the suit is not maintainable as is based upon the amount due
on invoices and there being no written contract; (b) original documents
having not been filed; (c) the Vice Chancellor having committed a fraud
upon the University two FIRs having been lodged against him; (d) since
the sanction was only of
1.25 crores, the Vice Chancellor had no
authority to grant the approval for the expenses of
1.40 crores; (e)
interest was never agreed to be 24% per annum, and (f) the plaintiff has
paid lesser amount to the publishers than claimed. Reference is made to
his admissions viz. his profits would never exceed 5%.
6. Qua issue (a) the suit being not maintainable under Order
XXXVII, being filed on the amount of invoices, the learned counsel for
the defendant relied upon a judgment dated 31.08.2012 GE Capital
Services India vs. May Flower Healthcare Pvt. Ltd. & Ors. in CS(OS)
2859/2011 wherein the following was held:
“5. xxxx Only when the liability which is admitted in the dishonoured
instrument or in the written document containing a liquidated demand
as payable to the plaintiff, suits can be filed under Order 37 CPC.
Those suits claiming amounts which are only balances due at the foot
of account cannot be treated as falling under Order 37 CPC because
the suit claim is based on the account and the amount claimed is not a
Page 4 of 13
CS(OS) No.1451/2014
liquidated amount arising/payable to the plaintiff on an instrument on
the limited types which are the subject matter of Order 37 CPC. Entries
and statements of account have necessarily to be proved as per Section
34 of the Evidence Act,1872 for the balance at the foot of the account to
be arrived at.
xxxxx
in the present case the suit is not based on the invoices only but the
amount claimed in the suit is the balance due at the foot of a running
account i.e. after giving adjustment/credit for certain payments made
for the invoices/bills. The suit is therefore definitely not only on the
basis of invoice amounts alone for the same to be covered under Order
37 CPC.”
7. The facts in the judgment cited above reveal the suit therein was
never based on invoices but was based upon amount due at the foot of the
running account, which are not the facts herein. Rather in KLG Systel
Ltd. vs. Fujitsu ICIM Ltd. AIR 2001 Delhi 357 this Court held otherwise,
viz.,
“11. The Defendant/Applicant has also challenged the maintainability
of the suit under Order xxxvII of the C.P.C., stating that "there is no
debt or liquidated demand in money payable to defendant-Company
(sic. read Plaintiff)) and/or based on a written contract". It is no longer
res integra that Invoices/Bills are 'written contracts' within the
contemplation of this Order. Reference is directed to Messrs. Punjab
Pen House vs. Samrat Bicycle Ltd., , Corporate Voice (Pvt.) Ltd. vs.
Uniroll Leather India Ltd., , and Beacon Electronics vs. Sylvania and
Laxman Ltd., 1998 (3) Apex Decisions (Delhi) 141. There is, thus, no
hesitancy in holding that the present suit is a suit which should be tried
under the summary procedure of Order xxxvII of the C.P.C.”
8. And in M/s.Punjab Pen House vs. M/s. Samrat Bicycle Ltd. AIR
1992 Delhi 1 the Court held :
“5. xxxxx Therefore, when the goods are supplied through a bill on
certain terms and conditions duly agreed to between the parties, there
is no escape from the conclusion that it amounts to a written contract
between the parties. Therefore, I am of the view that the suit is covered
by cl. (2) sub-cl. (b) of 0. 37 of the Code according to which the
plaintiff seeks to recover a debt or liquidated amount in money payable
by the defendant with or without interest arising on written contract.
Learned counsel for the plaintiff also tried to cover the present suit on
the clause according to which recovery of a debt or liquidated money,
with or without interest is based on an enactment. xxxxx”
9. Qua contention (b) it was argued by the learned counsel for the
defendant that none of the original documents have been filed by the
Page 5 of 13
CS(OS) No.1451/2014
plaintiff; the approval note is only a photocopy. The learned counsel for
the defendant then relied upon Neebha Kapoor vs. Jayantilal Khandwala
and Ors. AIR 2008 SC 1117 wherein the Court held as follows:
“For the purpose of obtaining a summary judgment in terms of Order
37 of the Code, ordinarily the original documents must be produced.
Original documents are not available. Appellant, therefore, is
obligated to prove the loss of documents. Only because a suit has been
entertained as a summary suit, the same by itself may not be a ground
for passing of a judgment on mere asking. We have noticed the fact
situation obtaining herein. The High Court was of the opinion that it is
a case where unconditional leave should be granted. The question as to
whether the defence of the respondents is moonshine or not was not a
matter which required consideration of the High Court at that stage. A
decree could not have been granted on the basis of even photostat
copies of the documents . See Food Corporation of India v. Dena Bank,
Indore and another AIR 2004 MP 158] Presumption in regard to a
negotiable instrument or a bill of exchange in terms of Section 118 of
the Act is also an evidence. It is true that a presumption can be raised
that a bill of exchange was correctly stamped as provided for under
Clause (f) of Sub-section (2) of Section 128 of the Code but a decree is
to be passed by a court of law upon application of mind.”
10. However, as per the averments of the plaintiff all the originals viz.
approvals/notices/quotations etc. are stated to be with the defendant as
per the ordinary course of business dealings, though the letters of
acknowledgments of defendant upon which the plaintiff has relied upon
are lying with the plaintiff and they have shown it to the Court and even
offered the defendant to compare its copies with the originals.
Nevertheless the defendant does not challenge the approval given by the
Vice Chancellor but its challenge is only to his authority to approve such
transaction without following internal procedures. Admittedly the
plaintiff had no role to play in internal affairs of the defendant. Hence in
the circumstances where the original documents, are supposedly lying
with defendant the suit under Order XXXVII CPC shall be maintainable.
11. Qua contention (c) viz. fraud alleged against Vice Chancellor the
learned counsel for the defendant referred to State Bank of Saurashtra vs.
Page 6 of 13
CS(OS) No.1451/2014
Ashit Shipping Services (P) Ltd. and Anr. AIR 2002 SC 1993which
notes:
“13. Xxxxxx The Appellants have made serious allegations of fraud and
collusion. They had stated that such a document did not exist in their
records. This was not a defence which could be characterised, at this
stage, as sham or illusory or practically moonshine. These triable
issues should not have been summarily rejected by the trial Court
and/or the High Court.”
12. Even otherwise, in Madan Lal Limited vs. Growth Techno Projects
Ltd. and Ors. CS(OS) 197/2006 decided on 26.02.2009 the Court held
otherwise as under:
“15. xxxxxx In the circumstances aforesaid, I do not find any such
requirement; nor does Order 37 of the Code prohibits proceeding in
the absence of the original documents. Rule IA.No. 13021/07 & CS(OS)
200/06 & IA.No. 13018/07 & CS(OS) 201/06 5 of Order 37 empowers
the court to order the bill, hundi or note on which the suit is found to be
deposited with an office of the court; the same is indicative of there
being no mandatory requirement of the original being before the court
where the filing of original is deemed necessary for adjudication, of
course the court can refuse to proceed.”
13. Now as per the case of the plaintiff, on 01.10.2011 the plaintiff
was called by the then Vice Chancellor to cover a function, to be held on
04.10.2011, which function the Hon’ble Prime Minister was to
inaugurate. The facts reveal since there was an extreme urgency, the
estimates were given only on 03.10.2011 and were approved there and
then by the then Vice Chancellor and on 03.10.2011 itself the following
release order was issued:
“Please publish the enclosed sign long advt. on 4th Oct 2011 in the
following media on immediate translation in relevant language. In
minimum possible space under half page columns on the right hand
side of newspaper preferably top right. The hindi translation of the
advertisements must be done by the Translation cell, School of
Humanities, IGNOU. Translation of other languages can be done by
respective newspapers. ”
14. The said release order specified the advertisements to be given in
different newspapers/editions and its length be minimum of half page.
Page 7 of 13
CS(OS) No.1451/2014
15. The plaintiff then gave a bill dated 10.10.2011 disclosing inter alia,
the publications/editions which published such advertisements; the
release dates of such advertisements; the size details/surcharge details;
the space; the rate; the GR surcharge amount and the bill amount. Each
and every detail qua such advertisements is mentioned in the invoice and
such advertisements were in fact published in newspapers mentioned in
the release order given by the defendant and there is no denial to all these
averments by the defendant.
16. The dispute raised by the defendant is only qua the then Vice
Chancellor had no authority to grant such approval against financial
rules. This stand taken by the University appears to be frivolous as even
though on 20.10.2011 the Vice Chancellor had retired but admittedly on
23.12.2011 the University wrote a letter to the plaintiff and admitted its
liability to pay, as under:
“This has reference to your bill for Rs.1,40,87,238/- towards the Half
Page color advertisement of IGNOU published on 4/10/2011 in
National Media (The Indian Express, Hindustan Times, The Pioneer,
Amar Ujala, The Hindu). This bill is in under process for payment.
Due to delayed the Budget allocation the University shall release the
payment early next year.”
17. Further a letter dated 03.05.2012 was also written by the
University as under:
“with reference to your email dated 3rd May 2012 regarding the
outstanding payment of Rs.1.40 crores approx. This is to convey that
the payment will be made as soon as possible.”
18. The plaintiff has also filed a copy of a cheque of 62,12,472/-
being cheque of the half amount, less 10% discount, less 2% TDS and it
was signed by the same person who had filed this leave to defend
application. Rest of the half amount despite being admitted was never
Page 8 of 13
CS(OS) No.1451/2014
paid though the plaintiff had raised various demands and lastly a legal
notice dated 16.01.2014 was sent. Rather the defendant for three years
did not even care to reply to such demands and legal notice or raised
dispute of any alleged fraud on the part of the then Vice Chancellor.
19. It is strange to see till the time of filing of this suit the defendant
did not object to validity to such demands and rather sought time to make
such payments. As late as on 22.11.2013 the defendant replied to an RTI
of the plaintiff as under :
“Your letter dated 25.10.2013 has been duly received by our
Accounting and Finance Department. The description / answer to the
queries raised by you in your said reply are as follows:
Question 1: The advertisement was printed by Square Comm. Pvt. Ltd.
A copy of the Release Order is attached herewith.
Question 2: A copy of the Approval / Acknowledgement is attached
herewith.
Question 3: The Approval / acknowledgement has been given by the
Chancellor / Head person (of IGNOU).
Question 4: A copy of the Bill is attached herewith.
Question 5: 50% of the total Bill amount has already been paid. The
remaining amount is under process.
In the event of any objections or clarifications or further queries to the
above answers, the same can be presented before the First Appellate
Officer.”
20. All above show the defendant rather acknowledged the debt as late
till November 2013 but now in its leave to defend application is trying to
raise a dispute which was never there during and much after the
transaction. Rather in para 29 of its affidavit annexed to the application to
leave to defend, the defendant has admitted:
“that thereafter, as the amount of bill was more than the entire grant,
50% of the invoice amount that is 62,12,472/- was paid to the
plaintiff vide cheque no. 817957, drawn on Punjab National Bank,
Maidan Garhi, the balance 50% payment was kept pending for the
receipt of grant during the next financial year .”
Page 9 of 13
CS(OS) No.1451/2014
21. This averment is in contrast of the submission of the learned
counsel for the defendant the total grant awarded for this project was only
1.25 crores approx. and hence the Vice Chancellor could not have
granted the approval for an amount more than that.
22. Admittedly, the Ministry vide its letter dated 12.09.2011 received
by defendant on 21.09.2011 had approved Rs.1.255 crores for this
function as 1st installment. The letter dated 12.09.2011 of the Ministry
clarifies the position of the plaintiff:
“Sir,
I am directed to convey the sanction of the President to payment of
Grant-in-Aid of
1,25,50,000/- (Rupees Once Crore twenty five lakhs
and fifty thousand only) for Grant-in-Aid General as 1st Installment to
the Vice Chancellor, Indira Gandhi National Open University
(IGNOU), New Delhi for Indian Sign Language Research & Training
Centre (ISLRTC) at New Delhi, during the financial year 2011-12 Plan
(recurring) subject to following conditions:
xxxxx
Yours faithfully,
(R.P.Puri)
Under Secretary to the Govt. of India”
23. Hence the defense now sought to be created during the pendency
of this suit is nothing but a sham and a false defence. One could have
imagined if a dispute was raised during the period of transaction or just
after that but not years after when a suit is filed. Hence contention (c) and
(f) has no merit as the defendant cannot peep into the profit margins of
the plaintiff in such transaction after admitting its dues time and again.
24. Qua contention (d) it was argued by the defendant the plaintiff did
not charge any interest even at the time when part payments were made
by the defendant and there being no agreement to charge interest by the
plaintiff, the claim of interest @ 24% per annum is not maintainable. the
Page 10 of 13
CS(OS) No.1451/2014
defendant relied upon Steel Authority of India Ltd. vs. Century Tubes Ltd.
and Ors. 121 (2005) DLT 122, wherein the Court held:
“17. Suit is based on 22 dishonoured cheques. No document has been
relied by the plaintiff, much less shown during arguments, which
contains a written acknowledgment of the defendants that defendants
would be liable to pay interest @ 27% per annum. It is obvious that the
suit claims a relief which falls beyond the scope of Order 37 CPC in so
far it relates to recovery of interest.”
25. The judgment cited above has no relevance in the context as the
cited case is based purely on cheque but whereas this case herein is based
on an invoice containing various clauses, including that of interest, hence
the law applicable in these facts would be Dura-Line India Pvt. Ltd. vs.
BPL Broadband Network Pvt. Ltd. 111 (2004) DLT 736 wherein this
Court held:
“13. Point III Claim for interest at 24% in the absence of any
agreement, exorbitant and not sustainable.
Defendant also questions the claim for interest at the rate of 24 per
cent per annum. A perusal of the terms and conditions on the invoices
show that interest at the rate of 24 per cent per annum was payable.
Hence, the submission of Mr. Jain that there was no agreed rate of
interest and the claim for interest at the rate of 24 per cent per annum
is not correct as the conditions of invoice itself stipulated the rate of
interest itself.”
26. Hence the defendant has failed to raise any triable issue indicating
he has fair, reasonable or bonafide defence. In fact the defence sought to
be raised is illusionary, sham and practically moonshine. What need to
be done in these circumstances one may be guided by Mechelec
Engineers And Others vs. M/s. Basic Equipment Corporation 1977 SCR
(1)1060 wherein the Court held:
“In Smt. Kiranmoyee Dassi & Anr. v. Dr. J. Chatterjee(1), Das. J.,
after a comprehensive review of authorities on the subject, stated the
principles applicable to cases covered by order 37 C.P.C. in the form
of the following propositions (at p. 253):
(a) If the Defendant satisfies the Court that he has a good defence to
the claim on its merits the plaintiff is not entitled to leave to sign
Page 11 of 13
CS(OS) No.1451/2014
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 defence although not a positively good
defence 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 has a defence, yet,
shews such a state of facts as leads to the inference 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.
(e) If the Defendant has no defence or the defence 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 defence to proceed if the amount claimed is paid
into Court or otherwise se- cured and give leave to the Defendant on
such condition, and thereby show mercy to the Defendant by enabling
him to try to prove a defence".-------
27. The defence of defendant being illusory, sham and practically
moonshine hence the leave to defend is though granted but only upon the
defendant depositing the suit amount with upto date interest @ 12% per
annum with effect from date of filing of suit till today within two months
and the amount so deposited be released to the plaintiff upon its filing an
affidavit/undertaking that it shall deposit the same within a month if the
Court so desire/orders to deposit.
28. In above terms the application stand disposed of.
CS(OS) 1451/2014
29. Upon deposit of such amount by the defendants, written statement
be filed by the defendant within four weeks thereafter with an advance
Page 12 of 13
CS(OS) No.1451/2014
copy thereof to the plaintiff. Replication, if any, thereto be also filed
within two weeks thereafter.
30. List before the Joint Registrar on 12.12.2018.
31. Matter be placed before Court upon completion of pleadings.
YOGESH KHANNA, J
SEPTEMBER 07, 2018
DU
Page 13 of 13
CS(OS) No.1451/2014