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Delhi High CourtIndian Cases

Mrs. Sunanda Mittal vs Kotak Mohindra Bank Ltd. on 12 July 2006

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Delhi High Court
Mrs. Sunanda Mittal vs Kotak Mohindra Bank Ltd. on 12 July, 2006
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul

Sanjay Kishan Kaul, J.

1. Allowed subject to just exceptions.

2. This application has been filed under Order 41 Rule 27 of the Code of Civil Procedure, 1908 seeking to place on record a copy of the complaint filed by the respondent against the petitioner. All that has been stated is that a copy has been received recently and could not be filed before the Trial Court. No details have been given as to when the complaint was filed and when the petitioner received notice of the complaint. The application is vague and is dismissed.

CM(M) No. 1016/2006

1. The present petition has been filed by the petitioner aggrieved by the impugned order dated 10.03.2006 declining leave to the plaintiff to defend the suit filed under the provisions of Order 37 of the Code of Civil Procedure, 1908 (hereinafter referred to as the ‘said Code’) by the respondent-bank and consequently decreeing the suit.

2. The respondent-bank had filed a suit for recovery of loan amount of Rs 6 lakh along with interest accrued thereon. The petitioner is alleged to have agreed to repay the loan in 24 equated monthly Installments of Rs. 30,744/- with interest in pursuance to the agreement No. 432496 dated 26.08.2004 Since the petitioner is alleged to have failed to adhere to the financial discipline and failed to clear the amounts despite repeated reminders, the loan amount was recalled by a demand notice dated 07.07.2004 served on the defendants in the suit and thereafter the suit was filed. It may be noticed that the suit was initially filed both against the petitioner as defendant No. 1 and the husband of the defendant No. 1 as defendant No. 2. However, since defendant No. 2 passed away, respondent-bank took no steps to implead the legal representatives, in terms of the impugned order the suit was held to have abated against the said-defendant No. 2 and thus the decree was passed only against the present petitioner as defendant No. 1 after dismissing the application filed by the petitioner under Order 37 Rule 3(5) of the said Code.

3. In the application filed by the petitioner, one of the pleas raised was about the authorization in favor of the person instituting the suit. The petitioner alleged that no statement of account reflecting the outstanding payments has been filed and simultaneously took the plea that what was filed as a statement of account by the respondent-bank was incorrect. The petitioner denied availing of any loan facility and admitted that she had put her signatures at the instance of her husband who had informed her that the loan transaction was merely a sham transaction which was entered into with some financial services in order to show minimum target transactions to keep their agency alive. The documents were alleged to have been signed by the petitioner in blank under the influence of her husband and the bank is stated not to have placed on record anything to show disbursement of the loan.

4. The Trial Court has considered the documents placed on record including the relevant resolution dated 01.10.2004 authorizing Sh. Neeraj Kumar to institute the suit. In my considered view this ground can hardly be raised by the petitioner once the resolution itself has been placed on record. The statement of account filed along with the plaint as also the letters calling upon the petitioner to clear the outstanding have also been placed on record.

5. The Trial Court records that the main defense raised by the petitioner was that the transaction was actually a sham transaction and the loan documents had been signed at the best of her husband. The allegation arose since the loan agreement bore the stamp of Madhu Financial Services which was not made a party in the suit. This is also the plea which is sought to be advanced by learned Counsel for the petitioner now. The Trial Court analysed the loan agreement booklet and found that Madhu Financial Services is the name of the DMA agency. The loan agreement was, however, executed only between the respondent, the petitioner and her husband. The signatures on the loan documents are not even denied by the petitioner. The petitioner is not an uneducated lady who did not know what she was signing. If the petitioner and her husband both agreed to execute certain documents, the petitioner cannot evade liability by merely alleging that she had signed some documents at the behest of her late husband. The Trial Court has also noticed that the claim of interest is at 11.49 per cent per annum in accordance with Term 9 of Schedule 1 of the loan agreement.

6. Insofar as the principles for grant of leave to defend a suit filed under provisions of Order 37 of the Code are concerned, the same are well settled in view of the judgment of the Supreme Court in Mechalec Engineers and Manufacturers v. Basic Equipment Corporation AIR 1977 SC 577. The petitioner would be entitled to unconditional leave in terms of the principles laid in the said judgment if it is shown that the petitioner has substantial defense or has alleged facts which if proved true would entitle the petitioner to the rejection of the suit. However, if the defense is sham and a moonshine, the application is liable to be summarily rejected and the suit decreed.

7. The loan agreement is on record which is admittedly signed by the petitioner. The defense of a sham document cannot be accepted in view of the admitted signature of the petitioner on the same and the petitioner being an educated lady. It is apparent that due to some requirement of money at the relevant stage of time both the petitioner and her husband entered into the loan transaction but the petitioner now seeks to put the burden on her late husband by alleging that she merely signed the documents at the behest of her husband.

8. Learned counsel for the petitioner has also drawn the attention of this Court to the averments made in para 8 of the application for leave to defend where the aspect of Madhu Financial Service has been mentioned as also that the petitioner had not availed of the loan. Learned counsel contends that there is no specific denial in this behalf by the respondent-bank. However, a perusal of the replay shows that the contents of para 8 have been denied in toto. It, has, further been explained in the reply that the petitioner had availed of the loan and the documents were executed by the petitioner. The allegation of the documents being singed in blank has been denied. The role of Madhu Financial Services has already been discussed by the Trial Court as observed above and needs no further elucidation.

9. Learned counsel for the petitioner states that there is suppression of material facts and in this behalf has also referred to the judgment of the Apex Court in Mrs. Raj Duggal v. Ramesh Kumar Bansal AIR 1990 SC 2218. The judgment is one more in the line of judgments which state where friable issues are raised, leave ought to be granted. On the principle of law, there is no doubt, but in the present case there is no such friable issue raised. The loan transaction was not executed with Madhu Financial Services but with the petitioner and her husband.

10. I am of the considered view there is no patent error or erroneous exercise of jurisdiction by the Trial Court which would call for interference under Article 227 of the constitution of India.

11. Dismissed.