CIVIL APPEAL 293 of 2021

*IN THE HIGH COURT OF DELHI AT NEW DELHI

%Date of Decision : 05.05.2025

+RFA(COMM) 91/2023

REGENT CONTINENTAL.....APPELLANTThrough:Mr R.S. Tomar, Advocate.

versus

NAKUL ASSOCIATES

.....RESPONDENTThrough:Ms Vishalakshi Goel, Advocate.

CORAM:

HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MR. JUSTICE TEJAS KARIA

VIBHU BAKHRU, J. (ORAL)

1.The appellant has filed the present appeal under Section 13(1A) of theCommercial Courts Act, 2015 impugning an order dated 25.11.2022[impugned order] passed by the learned Commercial Court in CS (COMM.)No. 293/2021 captioned M/s Nakul Associates v. Regent Continental RegentGroups of hotels, whereby the appellant’s application for leave to defend thesuit was rejected and consequently the same was decreed.

2.The Respondent [plaintiff] had filed the aforementioned suit seekingrecovery of an amount of ₹17,24,420/- alongwith interest at the rate of 2% per month till 13.05.2021 and future interest.

3.The plaintiff is sole proprietor of concern named M/s NakulAssociates and is engaged in the business of dealing in Fire Alarms, FireFighting Systems, CCTV, Fire Doors and several other equipments. The

plaintiff claimed that the appellant [defendant] had approached him in themonth of July, 2019 for installing Fire Doors in one of his properties locatedat 2/6, East Patel Nagar, New Delhi-110008 [Patel Nagar property]. Theplaintiff claimed that meeting was conducted on 05.07.2019 for discussingthe terms of supplying and fixing of Fire Doors at the said address. Theplaintiff submitted quotation by letter dated 09.07.2019 for supplying andfixing Fire Glazed Doors at the said property. The same was accepted and thework was conducted to the satisfaction of defendant. The plaintiff claimedthat being satisfied with the work performed by the plaintiff at Patel Nagarproperty, the defendant once again requested the plaintiff for installing FireGlazed Doors at its property bearing the address 4/73, W.E.A., KrishnaMarket, Karol Bagh, New Delhi [Karol Bagh property].

4.The plaintiff claims that it had initially quoted an amount of₹19,49,500/- excluding taxes and other services but it scaled down the same after discussion with the defendant and had submitted the quotation for anamount of ₹16,00,125/- excluding taxes. The plaintiff claims that its quotation was accepted and the defendant issued cheque bearing no.001789 dated09.12.2019 for an amount of ₹6,00,000/- as an advance payment for executing the work at the Karol Bagh property. The plaintiff states that after receivingthe aforesaid advance payment, it supplied and fixed Fire Glazed Doors at theKarol Bagh Property. It also raised invoices for the supply and work executedbeing invoice no.35 dated 31.12.2019 amounting to ₹4,68,173/- and invoice no.42 dated 30.01.2020 amounting to ₹14,22,196/-. It is stated that the said work was completed on 03.03.2020 to the entire satisfaction of the defendant.5.In addition to the aforesaid invoices raised in respect of the work doneat Karol Bagh property, the plaintiff had also raised the invoice of ₹36,108/-

for some material supplied and fixed at the defendant’s Patel Nagar property.It is stated that after adjusting the amount of ₹6,00,000/- as received, the defendant was liable to pay balance amount of ₹13,26,477/-, which it had failed and neglected to do.

6.The plaintiff claimed that the defendant was not only required to paythe balance amount as invoiced but is also liable to pay an interest at the rateof 2% per month on the expiry of fifteen days from the date of invoices.

7.The plaintiff filed the summary suit [CS (COMM.) No. 293/2021]under Order XXXVII of the Code of Civil Procedure, 1908.

8.The defendant filed an application for leave to defend, inter alia¸claiming that the bills and invoices raised were fabricated and false and nogoods had been received by the defendants or their representatives. Paragraph7 of the defendant’s application for leave to defend is set out below:

“7. That the suit is based on false and frivolous documents.Thecopies of the invoice filed by the plaintiff with the suit are totallyfalse and fabricated and no goods was received by the defendantsor their representative.In fact, none from Defendants were goingto said property after 2015 as such, the suit which is based on thosefalse and fabricated documents is not maintainable and is liable tobe dismissed.”

9.The plaintiff claims that there is no question of invoices being doubtedas they bear the stamps of the defendant. It is also claimed that an advancehad been paid by the defendant, and therefore, the defence raised that it hadnot issued any purchase instructions and had not received goods is patentlyfalse.

10.The scope of the proceedings at the stage of leave to defend is not tofinally determine the dispute but to examine whether the defendant had raisedany triable issue.

11.In B.L. Kashyap and Sons Ltd. vs M/S JMS Steels and PowerCorporation (2022) 3 SCC 294, this court had observed as under:

“33. Itisatonceclearthateventhoughin IDBITrusteeship [IDBI Trusteeship Services Ltd. v. Hubtown Ltd.,(2017) 1 SCC 568 : (2017) 1 SCC (Civ) 386] , this Court hasobserved that the principles stated in para 8 of MechelecEngineers case [Mechelec Engineers & Manufacturers v. BasicEquipment Corpn., (1976) 4 SCC 687] shall stand supersededin the wake of amendment of Rule 3 of Order 37 but, on thecore theme, the principles remain the same that grant of leaveto defend (with or without conditions) is the ordinary rule; anddenial of leave to defend is an exception. Putting it in otherwords, generally, the prayer for leave to defend is to be deniedin such cases where the defendant has practically no defenceand is unable to give out even semblance of triable issuesbefore the court.

33.1. As noticed, if the defendant satisfies the Court that he hassubstantial defence i.e. defence which is likely to succeed, heis entitled to unconditional leave to defend. In the secondeventuality, where the defendant raises triable issues indicatinga fair or bona fide or reasonable defence, albeit not positivelygood defence, he would be ordinarily entitled to unconditionalleave to defend. In the third eventuality, where the defendantraises triable issues, but it remains doubtful if the defendant israising the same in good faith or about genuineness of theissues, the trial court is expected to balance the requirements ofexpeditious disposal of commercial causes on one hand and ofnot shutting out triable issues by unduly severe orders on theother. Therefore, the trial court may impose conditions both asto time or mode of trial as well as payment into the court orfurnishing security. In the fourth eventuality, where theproposed defence appears to be plausible but improbable,heightened conditions may be imposed as to the time or modeof trial as also of payment into the court or furnishing securityor both, which may extend to the entire principal sum togetherwith just and requisite interest.

33.2. Thus, it could be seen that in the case of substantialdefence, the defendant is entitled to unconditional leave; andeven in the case of triable issue on fair and reasonable

defence, the defendant is ordinarily entitled to unconditionalleave to defend. In case of doubts about the intent of thedefendant or genuineness of the triable issues as also theprobability of defence, the leave could yet be granted but whileimposing conditions as to the time or mode of trial or paymentor furnishing security. Thus, even in such cases of doubts orreservations, denial of leave to defend is not the rule; butappropriate conditions may be imposed while granting theleave. It is only in the case where the defendant is found to behaving no substantial defence and/or raising no genuine triableissues coupled with the court's view that the defence is frivolousor vexatious that the leave to defend is to be refused and theplaintiff is entitled to judgment forthwith. Of course, in the casewhere any part of the amount claimed by the plaintiff isadmitted by the defendant, leave to defend is not to be grantedunless the amount so admitted is deposited by the defendant inthe court.

33.3. Therefore, while dealing with an application seekingleave to defend, it would not be correct approach to proceedas if denying the leave is the rule or that the leave to defend isto be granted only in exceptional cases or only in cases wherethe defence would appear to be meritorious one. Even in thecase of raising of triable issues, with the defendant indicatinghis having fair or reasonable defence, he is ordinarily entitledto unconditional leave to defend unless there be any strongreason to deny the leave. It gets perforce reiterated that even ifthere remains reasonable doubt about the probability ofdefence, sterner or higher conditions as stated above could beimposed while granting leave but, denying the leave would beordinarily countenanced only in such cases where the defendantfails to show any genuine triable issue and the court finds thedefence to be frivolous or vexatious.

12.In the given facts of the present case, there is material on record toindicate that the plaintiff had supplied and fixed glazed doors as claimed andit had also issued invoices, which were received by the defendant.Thedefendant’s defence that Karol Bagh property was leased and he had nevervisited it, is prima facie difficult to accept. In the given circumstances, the

learned Commercial Court had examined the defence raised and found thatthere was no explanation furnished by the defendant on various aspectsincluding as to the payment of advance.It is contended on behalf of thedefendant that there were no dealings between the parties. Given the facts andmaterial on record, the learned Commercial Court found the said defence wasinsubstantial. The relevant extract of the impugned order is set out below:

“In regard to the second point, plaintiff has not placed any purchaseorder for the invoices in question. There is also no statement ofaccount. Ld Counsel for the plaintiff argued that the invoices itselfprove that orders were placed by the defendant and since they hadonly limited dealings based on the three invoices, therefore, they werenot maintaining any running account. As far as the claimed amount isconcerned plaintiff has placed on record his bank statements as perwhich they had received Rs. 6 Lacs from the defendant on 09-12-2019. Defendant has not specifically replied or given any explanationof this cheque amount. Their only stand is that they had not given anyorder nor any goods were received. Thus, there is no explanation whythe amount of Rs. 6 lac was given to the plaintiff if they had nodealings with the plaintiff. The stamp and signature on the threeinvoices can be taken.as an acknowledgment of the goods I amountby the defendant as there is no explanation as to under what condition,their stamp and their AR's signatures were appearing on the same.Further, plaintiff has placed on record legal notice which was allegedto be replied but no such reply is filed.”13.Whilst the learned Commercial Court has taken prima facie view asto the defence sought to be raised; we are unable to accept that the defendanthas not raised any triable issue. Even though, the defence raised may notappear genuine, the defendant’s request for leave to defend could not bedenied. In the given circumstances, in our view, conditional leave to defendought to have been granted.

14.In view of the above, we consider it apposite to allow the present appealand grant conditional leave to defend the suit on maintaining the condition to

deposit the entire principal amount.

15.The appeal is allowed in the aforesaid terms. The impugned order is setaside. The defendant will file his written statement within period of thirtydays from date.

16.We note that the defendant has deposited the entire amount as claimedby the plaintiff with the registry of this court. Insofar as the said deposit isconcerned, the Registry of this Court shall abide by any order of the learnedCommercial Court regarding its disbursal.

17.List the suit before the learned Commercial Court on 26.05.2025.

VIBHU BAKHRU, J

MAY 05, 2025/tr

TEJAS KARIA, J

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RFA(COMM) 91/2023