Facts
The Respondent (Plaintiff) filed a summary suit under Order XXXVII of the CPC for the recovery of ₹35,00,000/-, asserting she provided a friendly loan of ₹25,00,000/- to the Appellant (Defendant) in 2016 via RTGS
Source reference: p. 2, para 2-4In July 2022, the Defendant issued two cheques totaling ₹35,00,000/- (including interest) which were dishonored with the remark "No such account"
Source reference: p. 3, para 9Summons for appearance were served on 15.09.2023, but the Defendant refused service
Source reference: p. 4, para 12-13The Defendant later filed an application for condonation of a 60-day delay in entering appearance and sought leave to defend, claiming he never received summons and that the debt was a business investment adjusted through work orders for the Plaintiff's husband
Source reference: p. 4, para 14-15; p. 10, para 45-46The Trial Court dismissed the delay condonation application and decreed the suit in favor of the Plaintiff
Source reference: p. 5, para 21Issues
1. Whether the Appellant established "sufficient cause" for the condonation of the 60-day delay in entering appearance under Order XXXVII Rule 3(7) of the CPC
Source reference: p. 8, para 352. Whether the Appellant disclosed a substantial or plausible defense that would entitle him to leave to defend the suit
Source reference: p. 10, para 44Law Applied
The court applied Order XXXVII of the Civil Procedure Code, 1908, specifically Rule 2(3), which mandates that in default of appearance, the allegations in the plaint are deemed admitted and the plaintiff is entitled to a decree
Source reference: p. 4, para 13Rule 3(7), which allows the court to excuse delays in entering appearance or applying for leave to defend upon "sufficient cause"
Source reference: p. 8, para 35The court further relied on IDBI Trusteeship Services Ltd. v. Hubtown Ltd. (2017), which categorizes the standards for granting leave to defend based on the quality of the defense (substantial, plausible, or sham)
Source reference: p. 7, para 31B. L. Kashyap & Sons Ltd. v. M/s JMS Steels & Power Corporation & Anr. (2022), affirming that leave is the rule and denial the exception
Source reference: p. 8, para 32Reasoning
The court rejected the Appellant’s claim of lack of knowledge regarding the suit.
Source reference: p. 8-9, para 37-39It noted that an MOU dated 23.05.2023, executed between the Appellant and the Plaintiff's husband, specifically referenced the pendency of the present suit, proving the Appellant was aware of the litigation months before the summons were refused in September 2023
Source reference: p. 8-9, para 37-39Regarding the defense on merits, the court held that the Appellant’s business dealings with the Plaintiff’s husband did not discharge his liability to the Plaintiff, as she was a separate legal entity and the lender of record
Source reference: p. 12, para 52The court emphasized that the Appellant's issuance of two cheques in 2022 for the exact principal and interest amount militated against his defense that the debt had already been "adjusted" through work orders between 2016 and 2017
Source reference: p. 12-13, para 54-55Consequently, the court found the defense to be neither substantial nor plausible
Source reference: p. 13, para 58Holding
The High Court dismissed the appeal and upheld the Trial Court's judgment
The court held that the Appellant failed to show "sufficient cause" for the delay in appearance because his prior knowledge of the suit was evidenced by his own documents
Source reference: p. 9, para 43The court further held that no substantial defense was disclosed that would justify granting leave to defend
Source reference: p. 13, para 59The decree for ₹35,00,000/- with 8% interest per annum was maintained
Source reference: p. 1, para 1Original Court PDF
Bipin KumarvsLakshmi Chhabra
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