Tuesday, 12 May 2020

Whether suit for recovery of money can be filed as Commercial Suit?

The counsel for the plaintiffs, on being asked to show under which Clause of Section 2(1)(c) of the Commercial Courts Act, 2015, the present claim constitutes a commercial dispute, draws attention to clause (i) of Section 2(1)(c) of the Commercial Courts Act but which provides for “ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents” to constitute commercial disputes.
30. However, all suits for recovery of monies cannot fall under Clause (i) supra of Section 2(1)(c) of the Commercial Courts Act. Suffice it is to state that the suit is not based on any transaction relating to mercantile documents. Thus, the suit is found to have been wrongly filed as a commercial suit.
31. The Registry to re-number the suit as an ordinary suit.
In the High Court of Delhi at New Delhi
(Before Rajiv Sahai Endlaw, J.)

Kailash Devi Khanna   v.  DD Global Capital Ltd.
CS(COMM) 34/2016 & IAs No. 7958/2018 
Decided on August 28, 2019
Citation: 2019 SCC OnLine Del 9954

The Order of the Court was delivered by
Rajiv Sahai Endlaw, J.:— Application of the plaintiffs, for summary judgment in favour of the plaintiffs is pending consideration. The defendants no. 1 and 4 have thereafter filed IA No. 1701/2019 and 1702/2019 for amendment of their written statements. It is however the settled position in law, that an application for amendment of pleadings, even if filed subsequent to the application under Order XII Rule 6 of the Code of Civil Procedure, 1908 (CPC) or under Order VII Rule 11 of the CPC or for summary judgment, is to be considered first. Accordingly, the counsel for the defendants no. 1 and 4 and the counsel for the plaintiffs have been heard on IAs No. 1701/2019 and 1702/2019.
2. I may at the outset state that both the applications for amendment of written statements have been filed, invoking Section 151 of the CPC. Upon attention of the counsel for the applicants/defendants no. 1 and 4 being drawn to the said fact, he states that though he had filed the application invoking Order VI Rule 17 of the CPC but the Registry of this Court raised an objection and asked the counsel to file the application under Section 151 of the CPC and accordingly the change was made.
3. On enquiry, the counsel for the applicants/defendants 1 and 4 has nothing to show that the Registry had so raised an objection. If any objection had been so raised, it would have been in writing and cannot be verbal and the application would have been returned to the applicants/defendants no. 1 and 4 with the said objections. It is thus quite obvious that an alibi of the objection by the Registry is being falsely taken.
4. I may however observe that even if the Registry had raised such an objection, it is the duty of the counsel to inform the Registry of the correct position, by citing the law. It is the Advocates who are supposed to know the law and if a wrong objection is raised by the Registry, to satisfy the Registry in that respect, instead of blindly following the Registry.
5. The counsel has been cautioned, that if in future, such applications are filed, they shall be dismissed at the threshold. It appears that that is the only way to inculcate discipline.
6. Issues in this suit were framed on 20th September, 2017 and affidavits by way of evidence directed to be filed within four weeks and commission issued for recording evidence and the parties directed to appear before the Commissioner on 17th October, 2017.
7. A perusal of the commission proceedings shows the parties to have appeared before the Commissioner appointed for recording evidence, on 16th November, 2017 when statement of PW1 was partly recorded and the proceedings adjourned to 24th November, 2017 for further statement of PW1. On 24th November, 2017, further statement of PW1 was recorded and the proceedings adjourned to 16th December, 2017.
8. The suit came up before the Court on 6th December, 2017, for disposal of the pending applications, when finding that admission/denial of documents was not complete, and observing that recording of evidence could not commence unless there was admission/denial of documents, the parties were directed to file affidavits of admission/denial of documents and the proceeding on commission stayed. Vide subsequent order dated 20th July, 2018, the commissioner was directed to complete the evidence of the parties within three months therefrom. However vide order dated 24th August, 2018, on application of the applicants/defendants, the commissioner was again directed to not proceed with recording of evidence. Ultimately, vide order dated 20th November, 2018, the recording of evidence before the Commissioner was ordered to go on. IAs No. 1701/2019 & 1702/2019 have been filed thereafter.
9. The counsel for the defendants no. 1 and 4, upon attention being drawn to the proviso to Order VI Rule 17 of the CPC, is found to be oblivious of the requirement therein, to satisfy the Court, that inspite of ‘due diligence’, the pleas sought to be taken by way of amendment could not be taken before the commencement of trial, and merely states that there are judgments to the effect that Court has discretion. No judgments are however shown. The defendants no. 1 and 4, in paragraphs 3 and 4 of IA No. 1701/2019 of the defendant no. 1 for amendment, have pleaded as under:
“3. It is stated that apart from the present suit that Plaintiff has also filed a false and frivolous criminal complaint against the Defendant No. 1 and Mr. Sanjay Gambhir. It is stated that after the written statement in the present case had been filed, during the police investigation the Defendant No. 1 came across certain documents and record which clearly establish that the claim of the Plaintiff is frivolous.
4. It is further stated that though the Defendant No. 1 company had got the said records some time back it had not taken any steps to amend the Written Statement till now as family members were trying to resolve the disputes between the parties and several meetings had taken place between the Plaintiffs and the Defendants. However after the last date of hearing the Plaintiff managed to get the Defendant No. 2 into Police custody and with great efforts the Defendant No. 2 has managed to obtain bail. It is stated that the Defendants were hoping that due to family intervention the matter would be resolved, however after the said incident it is quite evident that the Plaintiff will go to any extent to propound its false claim and hence it is most imperative that the Defendant No. 1 amends its written statement to bring on record the relevant details.”
and in paras 3 and 4 of the application of the defendant no. 4, being IA No. 1702/2019, pleaded as under:
“3. It is stated that apart from the present suit that Plaintiff has also filed a false and frivolous criminal complaint against the Defendant No. 1 and Mr. Sanjay Gambhir. It is stated that Mr. Sanjay Gambhir was taken into custody by the police on 28.11.2018 in connection with the said FIR. The said Defendant in order to obtain bail started looking for further documents as they were very old records.
4. It is stated that there was a family dispute in the Gambhir family which ultimately was resolved by the parties by entering into a family settlement in 2016. It is stated that the record regarding the group companies which fell to the share of the Mr. Sanjay Gambhir was put in several cartons and kept at A-3, CC Colony (one of the family properties). It is stated that when Mr. Sanjay Gambhir was arrested all the said records were checked and ex-employees were called to verify the claims of the Plaintiffs. It was during the said exercise that the Defendants found bank statements of Defendant No. 4 evidencing payments of substantial amounts to the Plaintiffs.”
10. The counsel for the plaintiffs, opposing the applications for amendment, has referred to Vidyabai v. Padmalatha, (2009) 2 SCC 409 laying down that proviso to Order VI Rule 17 of the CPC “is couched in a mandatory form. The court's jurisdiction to allow such an application is taken away unless the conditions precedent therefor are satisfied viz. it must come to a conclusion that in spite of due diligence the parties could not have raised the matter before the commencement of the trial.” and that “It is the primal duty of the court to decide as to whether such an amendment is necessary to decide the real dispute between the parties. Only if such a condition is fulfilled, the amendment is to be allowed. However, proviso appended to Order 6 Rule 17 of the Code restricts the power of the court. It puts an embargo on exercise of its jurisdiction. The court's jurisdiction, in a case of this nature is limited. Thus, unless the jurisdictional fact, as envisaged therein, is found to be existing, the court will have no jurisdiction at all to allow the amendment of the plaint.” He has argued, that in the absence of the existence of jurisdictional fact required by the proviso to Order VI Rule 17, to be pleaded, the Court has no discretion to allow the amendment.
11. The counsel for the defendants no. 1 and 4, in rejoinder has referred to Usha Balashaheb Swami v. Kiran Appaso Swami, (2007) 5 SCC 602 and contends that the same lays down that the amendments to the written statement have to be more liberal than the amendments to the plaint. However on enquiry, whether the said judgment lays down that the proviso to Order VI Rule 17 of the CPC has no application to a defendant, agrees that it does not so lay down. Once it is so, the reliance on Usha Balashaheb Swami supra is misconceived.
12. Though the counsel for the defendants no. 1 and 4 has also argued that the trial has not commenced in view of order dated 24th August, 2018 staying the trial, but no merit is found therein. Not only were the issues in the suit framed nearly two years ago but the affidavits by way of examination-in-chief of PW1 were also filed and recording of statement of PW1 begun on 16th November, 2017. There can thus be no manner of doubt that trial in the suit has begun, within the meaning of proviso to Order VI Rule 17 of the CPC interpreted in this respect also, in Vidyabai supra and has to apply. No advantage can be taken by the defendants no. 1 and 4, of the order dated 6th December, 2017 suspending the trial, for the reason that the applications have admittedly been filed after the order dated 20th November, 2018 directing trial to go on. Thus, the earlier suspension of the recording of evidence, is of no avail. It is not as if the Court, by any of the orders aforesaid, held the recording of evidence on 16th November, 2017 and 24th November, 2017 to be non est.
13. Thus, the only question for adjudication is, whether the paragraphs 3 and 4 of the applications, as set out above, satisfy the requirement of the proviso to Order VI Rule 17 CPC and or constitute a plea within the requirement of the proviso to Order VI Rule 17 of the CPC.
14. The words ‘due diligence’ used in the proviso to Order VI Rule 17 of the CPC have a definite connotation in law and have been interpreted by Courts repeatedly and in Chander Kanta Bansal v. Rajinder Singh Anand, (2008) 4 SCC 117 as meaning, diligence reasonably expected from, and ordinarily exercised by, a person who seeks to satisfy a legal requirement or to discharge an obligation, and as, doing “everything reasonable”, not “everything possible”; and as, “such diligence as a prudent man would exercise in the conduct of his own affairs”. The requirement, to satisfy the Court of the due diligence of the litigant, stands on a much higher pedestal than a requirement, as in Section 5 of the Limitation Act, 1963, of ‘sufficient cause’. Due diligence is distinct from ignorance. Ignorance of a litigant or its counsel, does not amount to due diligence. Similarly, neglect to do what a litigant was required to do or as a prudent person was expected to do, also does not satisfy the requirement of due diligence. To satisfy the requirement of due diligence, the defendants No. 1 and 4 ought to have pleaded with reference to dates and documents and not generally. Seen in this light, the contents of paragraphs 3 and 4 of the applications are vague and do not even constitute a bare plea of due diligence. No particulars of dates, name and places are pleaded in relation to the criminal complaint cases, police investigation, documents which were found therein, the meetings for amicable settlement etc. It cannot be lost sight of that the legislature, vide amendment of CPC of the year 2002, introduced the proviso to Order VI Rule 17, notwithstanding the substantive part thereof enabling the Court to allow amendment “at any stage of the proceeding”. It was felt that the degree of prejudice to the opposite party, by an amendment, after commencement of trial, is greater than one at pre-trial stage. The pleas aforesaid of defendants No. 1 and 4 do not satisfy the requirement of it being beyond the control of defendants No. 1 and 4, to plead what is now sought to be pleaded, before commencement of trial. The defendants No. 1 and 4 admit that the documents on the basis whereof amended pleas as made, to have been available with the defendants. There is no explanation, why the same were not considered before drafting the written statement, as the defendants, if had exercised due diligence, were expected to do. If inspite of the defendants No. 1 and 4 merely paying lip service to the mandate of law, in the name of “discretion” and “amendment being necessary to determine real questions in controversy between the parties” amendments are allowed, it would do disservice to the legislative mandate.
15. The applications for amendment of the written statement thus are not found to contain any plea of the applicants/defendants no. 1 and 4, inspite of due diligence having not been able to raise the pleas sought to be raised, before commencement of trial.
16. Resultantly, IAs No. 1701/2019 and 1702/2019 are dismissed with costs of Rs. 20,000/- to the counsel for the plaintiffs.
17. IA No. 11181/2018 of the defendant no. 4 for modification of the order dated 20th July, 2018 is also pending consideration.
18. The counsel for the defendant no. 4 states that the said application is infructuous.
19. IA No. 11181/2018 is disposed of as infructuous.
20. That brings me to IA No. 7958/2018 of the plaintiffs under Order XIIIA of the CPC. This application has been filed, encouraged by the hearing on 19th November, 2018.
21. On 19th November, 2018, several pending applications were disposed of, with one of the said applications being IA No. 3960/2018 of the defendant no. 4 under Order XIIIA of the CPC as applicable to commercial suits, for summary dismissal of the suit.
22. One of the grounds taken for summary dismissal, was of the suit claim being barred by time. While dismissing the said application but finding the defendant no. 1 to be a company, it was enquired from the counsel for the defendants no. 1, 2, 4 and 5 as to how the defendant no. 1, in its books of accounts, was treating the amounts of Rs. 1,17,59,854/-. Upon no response forthcoming, the balance sheets of the defendant no. 1 were directed to be filed and the Director of the defendant no. 1 directed to appear in person.
23. The counsel for the plaintiffs, in support of IA No. 7958/2018 under Order XIII-A of the CPC as applicable to commercial suits, for a summary decree in favour of the plaintiff, has drawn attention to the affidavit dated 25th January, 2019 filed by the defendant no. 1 in pursuance to the directions on 19th and 20th November, 2018 and to page 126 thereof, being a part of the balance sheet of the defendant no. 1 for the period 1st April, 2015 to 31st March, 2016, showing the “other loans” taken by the defendant no. 1. Under the said head, the defendant no. 1 has disclosed “Advance against Amritsar Debts” of a total of Rs. 72,59,200/- comprising of Rs. 25,00,000/- from Great Eastern Sourcing Company, Rs. 30,83,600/- from plaintiff no. 1 Kailash Devi Khanna, Rs. 9,75,600/- from plaintiff no. 3 Upasana Khanna and Rs. 7,00,000/- from plaintiff no. 2 Vivek Khanna.
24. The counsel for the plaintiffs contends that the plaintiff no. 2 Vivek Khanna is the sole proprietor of Great Eastern Sourcing Company. However the counsel for the plaintiffs is unable to show any plea to the said effect.
25. I have enquired from the counsel for the defendants no. 1, 2, 4 and 5, why a decree forthwith should not be passed against the defendant no. 1 and in favour of plaintiffs no. 1, 2 and 3, of recovery of amounts admitted in the balance sheet to have been received from them.
26. Though the counsel for the defendants contends that the said amounts are shown under the head “Advance against Amritsar Debts” as some debts had been assigned to the plaintiff no. 2 and in consideration of which, some amounts were transferred and nothing was due from the defendants to the plaintiffs but admits that in the written statement as existing, there is no plea to the said effect and the plea was sought to be taken by way of amendment, which has been dismissed today.
27. The counsel for the defendants however draws attention to the order dated 20th September, 2017, issue no. (ix) framed wherein is as under:
“(ix) Whether the present suit is not a ‘commercial dispute’ under Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015? OPD.”
and contends that if the suit is not a commercial suit, Order XIII-A of the CPC whereunder summary judgment in favour of the plaintiffs is sought, would not be applicable.
28. I may in this respect note that though the defendant no. 4 himself had also applied under Order XIII-A of the CPC for summary dismissal of the suit, but there can be no estoppel against law and thus the defendants cannot now be stopped from contending so.
29. The counsel for the plaintiffs, on being asked to show under which Clause of Section 2(1)(c) of the Commercial Courts Act, 2015, the present claim constitutes a commercial dispute, draws attention to clause (i) of Section 2(1)(c) of the Commercial Courts Act but which provides for “ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents” to constitute commercial disputes.
30. However, all suits for recovery of monies cannot fall under Clause (i) supra of Section 2(1)(c) of the Commercial Courts Act. Suffice it is to state that the suit is not based on any transaction relating to mercantile documents. Thus, the suit is found to have been wrongly filed as a commercial suit.
31. The Registry to re-number the suit as an ordinary suit.
32. With the aforesaid, the issue no. (ix) framed on 20th September, 2017 stands decided.
33. IA No. 7958/2018 under Order XIII-A of the CPC is consequently dismissed.
34. The recording of evidence on commission as already scheduled, to go on.
35. List after recording of evidence is completed.
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