[ad_1]
Delhi High Court
Rama Luthra vs Deepali Malik & Ors on 25 August, 2025
Author: Purushaindra Kumar Kaurav
Bench: Purushaindra Kumar Kaurav
$
* IN THE HIGH COURT OF DELHI AT NEW DELHI
BEFORE
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
+ CS(OS) 360/2024, I.A. 10148/2024, I.A. 30317/2024, I.A.
30859/2024, I.A. 30949/2024, I.A. 34332/2024, I.A. 46912/2024 and
I.A. 49224/2024
RAMA LUTHRA
W/O LATE MR.. H.C. LUTHRA,
AGED ABOUT 75 YEARS,
R/O E-225 , 3RD FLOOR,
EAST OF KAILASH,
NEW DELHI-110065 .....Plaintiff
(Through: Mr Gautam Narayan, Sr. Advocate, with Mr.Abhimanyu
Bhandari, Sr. Advocate with Ms.Srishti Juneja and Ms.Sugandh,
Advocates.)
Versus
DEEPALI MALIK
W/O LATE MR. SURENDER MALIK
R/O HOUSE NO. 575, RAILWAY ROAD,
ADVOCATE COLONY, WARD NO. 19, HANSI,
HISAR - 125033,
HARYANA .....Defendant No.1
DUSHYANT MALIK
S/O LATE MR. SURENDER MALIK
R/O HOUSE NO. 575, RAILWAY ROAD,
ADVOCATE COLONY, WARD NO. 19, HANSI,
HISAR - 125033, HARYANA
.....Defendant No.2
PRERNA
D/O LATE MR. SURENDER MALIK
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
R/O HOUSE NO. 575, RAILWAY ROAD,
ADVOCATE COLONY, WARD NO. 19, HANSI,
HISAR - 125033, HARYANA
.....Defendant No.3
AJIT SINGH MALIK
F/O LATE MR. SURENDER MALIK
R/O HOUSE NO. 575, RAILWAY ROAD,
ADVOCATE COLONY, WARD NO. 19, HANSI,
HISAR - 125033, HARYANA
.....Defendant No.4
VIDYA MALIK
M/O LATE MR. SURENDER MALIK
R/O HOUSE NO. 575, RAILWAY ROAD,
ADVOCATE COLONY, WARD NO. 19, HANSI,
HISAR - 125033, HARYANA
......Defendant No.5
(Through: Mr.Sandeep Sharma, Sr. Advocate with Mr.Raktim,
Mr.Vikas, Mr.Shivam Pal Sharma, Mr.Aman Dhyani, Ms.Kanchan,
Mr. S. Vinod, Mr.Sarthak, Mr.Vijay and Mr.Akash, Advocates for D-1
to 5.)
------------------------------------------------------------------------------------
% Reserved on: 01.08.2025
Pronounced on: 25.08.2025
-----------------------------------------------------------------------------------
JUDGMENT
I.A. 33665/2024 (By D-1 and 2 under Order XXXVII Rule 3(5)- for grant of
unconditional leave to defend to D-1to 5)
The instant application has been filed on behalf of the Defendants
seeking leave to defend the present suit.
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
Brief facts
2 As per the plaint, the facts manifest that in August 2021, the Plaintiff
was approached by one late Mr. Surender Malik, who requested a short-term
financial loan of ₹ 5,00,00,000. Pursuant to the said request, on 18.08.2021,
the parties entered into a formal Loan Agreement dated 18.08.2021, whereby
the Plaintiff advanced the aforesaid sum, to late Mr. Malik, carrying an
agreed interest @ 12% per annum, for a fixed tenure of one year
commencing from 18.08.2021 and ending on 17.08.2022.
3 The contractual stipulation required that monthly interest payments be
made by the 7th day of each succeeding month through RTGS, NEFT, or
IMPS. The loan was disbursed through two cheques, aggregating to the
principal sum of ₹ 5,00,00,000, and the same was duly secured by a Demand
Promissory Note of even date executed by late Mr. Malik in favour of the
Plaintiff.
4 Between 25.11.2021 to 13.07.2022, late Mr. Malik availed five
successive short-term loans from the Plaintiff, each secured by
corresponding loan agreements and promissory notes. All loans carried 12%
interest p.a., repayable in monthly instalments on identical terms. The loans
were disbursed via cheques on the respective agreement dates.
5 On 18.08.2022, late Mr. Malik sought an extension for the repayment
of the first loan dated 18.08.2021. A “Renewed Term Sheet” was executed on
the same date, extending the repayment deadline to 17.08.2023. In
furtherance thereof, late Mr. Malik executed a fresh Demand Promissory
Note dated 18.08.2022 for ₹5 crores in favour of the Plaintiff.
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
6 In partial discharge of his obligations, on 10.04.2023, the Plaintiff
received a payment of ₹1,50,00,000/- from late Mr. Malik towards the
principal, through RTGS. Thereafter, on 09.05.2023, the Plaintiff received
the last recorded interest payment from late Mr. Malik’s account, amounting
to ₹7,70,000/- for the month of April 2023, against a total interest due of
₹8,95,000/-.
7 On 09.06.2023, late Mr. Surender Malik passed away. Subsequent to
his demise, on 19.10.2023, the Plaintiff received ₹50,00,000/- towards the
outstanding principal, remitted in five equal tranches of ₹10,00,000/- each,
through RTGS/NEFT.
8 On 10.11.2023, the Plaintiff addressed a detailed written
communication to Defendant No. 1, i.e., the wife of late Mr Malik, setting
out the complete chronology of the loan transactions with late Mr. Malik,
along with particulars of repayments made, and called upon Defendant No. 1
to liquidate the remaining principal sum together with accrued interest.
9 Pursuant to the aforesaid notice, on 21.11.2023, Defendant No. 1
remitted a sum of ₹75,00,000/- towards the principal amount through RTGS.
Thereafter, on 04.03.2024, a further sum of ₹50,00,000/- was received from
Defendant No. 1 towards principal repayment via RTGS.
10 It is the case of the Plaintiff that she is a senior citizen and at this
juncture of her life, her only source of income was the interest on the loan
granted by her to late Mr. Surender Malik. It is also the case of the plaintiff
that she has not received even a single penny for the last 1.5 years and is
struggling to make ends meet. Thus, she has instituted the present suit under
Order XXXVII of the Code of Civil Procedure, 1908 (hereinafter referred to
‗CPC‘), seeking recovery of a sum of ₹7,75,21,689/- from the Defendants.
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
Submissions
11 Mr Sandeep Sharma, learned senior counsel for Defendants, at the
inception, points out that Defendants No. 3 and 5 have not yet been served
with summons in the present suit, as recorded vide order dated 16.07.2024
passed by the Joint Registrar. He contends that without prejudice, the said
Defendants, in the interest of expeditious disposal and to avoid procedural
delays, have proactively filed the instant application along with Defendants
no.1 and 2, seeking leave to defend despite the absence of formal service.
12 Mr. Sharma, learned senior counsel, has made the following broad
submissions:-
i) There exists no privity of contract between the Plaintiff and these
Defendants. No payment has been made to them by the Plaintiff,
and none of the relied-upon documents bear their acknowledgment
or signatures.
ii) The allegations regarding purpoted execution of loan agreements
between the Plaintiff and late Mr. Surender Malik are false,
rendering the suit misconceived and liable to dismissal.
iii) The Plaintiff seeks to enforce the alleged financial liabilities of late
Mr. Surender Malik against his legal representatives, despite no
fresh contract being entered into with them.
iv) The Defendants dispute the execution of the alleged promissory
notes and the receipt of any loan amounts,
v) The Plaintiff has filed false and fabricated documents. The suit
suffers from non-joinder and misjoinder of necessary parties.
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
13 Furthermore, learned senior counsel contends that the present suit
raises substantial triable issues that require an appreciation of evidence.
Reliance is placed on the decisions of the Supreme Court in B.L. Kashyap &
Sons Ltd. v. JMS Steels & Power Corporation1, Vinayak Purshottam Dube
(Deceased) through LRs. v. Jayashree Padamkar Bhat & Ors.2, the
decisions of this Court in Vijay Singh & Ors. v. Manali Malik & Ors.3,
Sarla Devi & Ors. v. Daya Ram & Ors4., and the decision of the Bombay
High Court in Smt. Sheela Arora v. Sanjay Fetah Bahadur Srivastava5.
14 In conclusion, he contends that the alleged loan agreements are
deficient and ineligible for summary proceedings under Order XXXVII of
CPC, and the Plaintiff has suppressed material facts and mischaracterized
transactions. He therefore prays for unconditional leave to defend, so that the
matter may proceed to trial on the merits.
15 Per contra, Mr. Gautam Narayan, learned senior counsel for Plaintiff,
submits that the leave to defend filed on behalf of Defendant Nos. 3 to 5 is
non-est, as they deliberately refused service of summons and failed to enter
an appearance. He contends that the affidavits filed with the application
reveal that Defendant Nos. 4 and 5 reside with Defendant Nos. 1 and 2.
Therefore, according to learned senior counsel, under Order XXXVII Rule
2(3) CPC, a defendant who fails to enter an appearance is deemed to admit
the plaint’s allegations, entitling the Plaintiff to a decree.
1
(2022) 3 SCC 294
2
(2024) 9 SCC 398
3
2009 SCC OnLine Del 1293
4
1994 SCC OnLine Del 689
5
2003 SCC OnLine Bom 1038
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
16 Learned senior counsel further submits that the Defendants have failed
to raise any genuine triable issues and as per settled law, the defence must be
bona fide and not frivolous or vexatious.
17 In the contextual background of the instant case, Mr. Narayan has
made the following submissions:-
i) Defendant No. 2 has expressly admitted that the Plaintiff advanced
the money to the late Mr. Surender Malik, further acknowledging
that the transaction was to be shown as a loan for accounting and
taxation purposes.
ii) The voice notes filed as Document No. 5 with the reply to I.A. No.
33665 of 2024, wherein late Mr. Surender Malik and Defendant
No. 1 repeatedly reassured the Plaintiff of repayment. These notes,
coupled with evidence of continued payments until March 2024,
establish that the transaction was a genuine loan rather than an
investment.
iii) The Defendants’ reliance on alleged investments in various entities
is unsupported and inconsistent. Their defence rests on trivial
objections, such as minor discrepancies in notarization dates of the
loan agreements, which are irrelevant. They have failed to dispute
the debt or address the issuance of security cheques by late Mr.
Malik.
iv) The Defendants’ objections, including references to incomplete
WhatsApp chats, are frivolous and intended solely to delay
proceedings. In contrast, the Plaintiff has provided substantial
documentation evidencing the loan, including agreements,
cheques, and voice assurances.
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed Signing Date:27.08.2025 By:PURUSHAINDRA 10:00:57 KUMAR KAURAV
v) Reliance is placed on the decisions in IDBI Trusteeship Services
Limited v. Hubtown Limited,6 Mechelec Engineers &
Manufacturers v. Basic Equipment Corporation 7 , Southern
Sales and Service v. Sauermilch Design,8 Sudin Dilip Talaulikar
v. Polycap Wires, 9Vipin Gupta v. Prem Singh,10 Swaranjit Singh
Sayal v. M.K. Jain,11 Abhay Kumar Jha v. Bosch12; Sanjeev Jain
v. Rajni Dhingra & Ors.,13 Mobile Arts S.A.L. v. Mauj Mobile
Pvt. Ltd.14 , and V.K. Enterprises & Anr. v. Shiva Steels. 15
18 In light of the above, it is submitted by learned senior counsel that the
Defendants’ leave to defend is baseless and should be rejected. The
Defendants have admitted the loan in material particulars, failed to raise any
triable issue, and are engaging in a strategy to delay adjudication of the
Plaintiff’s legitimate claim.
Contours of Order XXXVII Rule 3 (5) of CPC
19 It is trite law that the object of the summary procedure contemplated
under Order XXXVII of the CPC, is to ensure a swift, efficacious, and
expeditious adjudication of certain categories of suits, predominantly those
arising from written contracts, negotiable instruments, and other documents
evidencing liquidated demands, where expedition is essential to the
6
(2017) 1 SCC 568
7
(1976) 4 SCC 687
8
(2008) 14 SCC 457
9
(2019) 7 SCC 577
10
2006 SCC OnLine Del 981
11
2023 SCC OnLine Del 7585
12
RFA(OS)(Comm) 1/2024 before the Delhi High Court
13
2018 SCC OnLine Del 13093
14
Writ Petition No. 5795 of 2024 before the Bombay High Court
15
(2010) 9 SCC 256
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
preservation of commercial certainty and liquidity. The legislative intent is
to obviate protracted trials in cases where the Defendant does not possess a
substantial or bona fide defence, thereby protecting the Plaintiff’s right to an
early decree and preventing undue delay through frivolous or vexatious
pleas.
20 More importantly, under sub-rule (5) of Rule 3, the Defendant may
only defend the suit upon obtaining leave to defend, which shall be granted,
unconditionally or on terms, if facts disclosed a substantial or genuine
defence. The first proviso ensures that refusal of leave is permissible only
where the proposed defence is frivolous or vexatious, while the second
proviso mandates deposit of any admitted sum as a condition precedent to
the grant of leave.
21 The Supreme Court has consistently reiterated that the grant of leave
to defend is the rule and its denial is the exception. Where a substantial
defence is disclosed, unconditional leave must follow. Even in cases of
triable issues or plausible though doubtful defences, leave is ordinarily to be
granted, albeit subject to calibrated conditions. Refusal of leave is justified
only in rare situations where no genuine triable issue exists and the defence
is patently sham or vexatious.
22 Reference can be made to the decision of the Supreme Court in
Santosh Kumar v. Bhai Mool Singh16, where it has been held that when a
defence raises a bona fide and clear triable issue, unconditional leave to
defend must ordinarily be granted under Order XXXVII Rule 3(1) of CPC.
The Court emphasised that at the leave stage, it is sufficient if the
16
AIR 1958 SC 321
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
Defendant’s affidavit discloses facts which, if proved, would constitute a
plausible defence.
23 While relying on the aforesaid decision, the Supreme Court in
Machalec Engineering & Manufacturing v. Basic Equipment
Corporation,17 held that Order XXXVII of CPC, as it then stood, enjoins
upon the Court, upon application by the Defendant to give leave to appear
and to defend the suit. The relevant extract of the aforesaid decision reads as
under:-
7. We need not dilate on the well established principles repeatedly laid
down by this Court which govern jurisdiction of the High Courts under
Section 115 CPC. We think that these principles were ignored by the
learned Judge of the High Court in interfering with the discretionary
order after a very detailed discussion of the facts of the case by the
learned Judge of the High Court who had differed on a pure question of
fact — whether the defences could be honest and bona fide. Any decision
on such a question, even before evidence has been led by the two sides, is
generally hazardous. We do not think that it is fair to pronounce a
categorical opinion on such a matter before the evidence of the parties is
taken so that its effects could be examined. In the case before us, the
defendant had denied, inter alia, liability to pay anything to the plaintiff
for an alleged supply of goods. It is only in cases where the defence is
patently dishonest or so unreasonable that it could not reasonably be
expected to succeed that the exercise of discretion by the trial court to
grant leave unconditionally may be questioned. In the judgment of the
High Court we are unable to find a ground of interference covered by
Section 115 CPC.
8. In Kiranmoyee Dassi Smt v. Dr J. Chatterjee [AIR 1949 Cal 479 : 49
CWN 246, 253 : ILR (1945) 2 Cal 145.] Das, J., after a comprehensive
review of authorities on the subject, stated the principles applicable to
cases covered by Order 17 CPC 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 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 defence17
(1976) 4 SCC 687Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
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
be 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 secured 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.‖
24 In IDBI Trusteeship Services Limited, the Supreme Court has
extensively considered the pre-amendment and post-amendment provisions
of Order XXXVII Rule 3, the Court found that the discretion exercised by
the Courts under Order XXXVII to refuse leave to defend or to grant
conditional or unconditional leave to defend is a discretion akin to Joseph’s
multi-coloured coat – a large number of baffling alternatives present
themselves. It was also held that at one end of the spectrum is unconditional
leave to defend, granted in all cases which present a substantial defence, and
at the other end of the spectrum are frivolous or vexatious defences, leading
to refusal of leave to defend. In between these two extremes are various
kinds of defences raised, which capitulate conditional leave to defend in
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
most cases. In paragraph 17 of the aforenoted decision, the Supreme Court
has laid down the following broad principles: –
―17. It is thus clear that O.XXXVII has suffered a change in 1976, and
that change has made a difference in the law laid down. First and
foremost, it is important to remember that Milkhiram’s case is a direct
authority on the amended O.XXXVII provision, as the amended provision
in O.XXXVII Rule 3 is the same as the Bombay amendment which this
Court was considering in the aforesaid judgment. We must hasten to add
that the two provisos to sub-rule (3) were not, however, there in the
Bombay amendment. These are new, and the effect to be given to them is
something that we will have to decide. The position in law now is that the
trial Judge is vested with a discretion which has to result in justice being
done on the facts of each case. But Justice, like Equality, another
cardinal constitutional value, on the one hand, and arbitrariness on the
other, are sworn enemies. The discretion that a Judge exercises under
Order XXXVII to refuse leave to defend or to grant conditional or
unconditional leave to defend is a discretion akin to Joseph’s multi-
coloured coat – a large number of baffling alternatives present
themselves. The life of the law not being logic but the experience of the
trial Judge, is what comes to the rescue in these cases; but at the same
time informed by guidelines or principles that we propose to lay down to
obviate exercise of judicial discretion in an arbitrary manner. At one end
of the spectrum is unconditional leave to defend, granted in all cases
which present a substantial defence. At the other end of the spectrum are
frivolous or vexatious defences, leading to refusal of leave to defend. In
between these two extremes are various kinds of defences raised which
yield conditional leave to defend in most cases. It is these defences that
have to be guided by broad principles which are ultimately applied by
the trial Judge so that justice is done on the facts of each given case.‖
25 A perusal of the guidelines enumerated in the aforenoted paragraph
would reveal that on Defendant establishing a substantial defence, which is
likely to succeed, raising triable issues, showing a fair or reasonable
defence, the Defendant is entitled to unconditional leave, whereas, various
other factors need to be considered while granting conditional leave to
defend or refusing to grant leave to defend.
26 In B.L. Kashyap, the Supreme Court, while elucidating the governing
principles for the grant of leave to defend under Order XXXVII of CPC,
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
observed that denial of leave is justified only where the defence is frivolous
or vexatious, whereas the existence of reasonable doubt may warrant
imposition of conditions. In paragraph no.33 of the aforenoted decision, the
Supreme Court has made the following observations:-
―33. It is at once clear that even though in IDBI Trusteeship4, this Court
has observed that the principles stated in para 8 of Mechelec Engineers
case shall stand superseded in the wake of amendment of Rule 3 of Order
37 but, on the core theme, the principles remain the same that grant of
leave to defend (with or without conditions) is the ordinary rule; and
denial of leave to defend is an exception. Putting it in other words,
generally, the prayer for leave to defend is to be denied in such cases
where the Defendant has practically no defence and is unable to give out
even a semblance of triable issues before the court.
33.1. As noticed, if the Defendant satisfies the Court that he has
substantial defence i.e. a defence which is likely to succeed, he is entitled
to unconditional leave to defend. In the second eventuality, where the
Defendant raises triable issues indicating a fair or bona fide or
reasonable defence, albeit not a positively good defence, he would be
ordinarily entitled to unconditional leave to defend. In the third
eventuality, where the Defendant raises triable issues, but it remains
doubtful if the Defendant is raising the same in good faith or about
genuineness of the issues, the trial court is expected to balance the
requirements of expeditious disposal of commercial causes on one hand
and of not shutting out triable issues by unduly severe orders on the
other. Therefore, the trial court may impose conditions both as to time or
mode of trial as well as payment into the court or furnishing security. In
the fourth eventuality, where the proposed defence appears to be
plausible but improbable, heightened conditions may be imposed as to
the time or mode of trial as also of payment into the court or furnishing
security or both, which may extend to the entire principal sum together
with just and requisite interest.
33.2. Thus, it could be seen that in the case of substantial defence, the
Defendant is entitled to unconditional leave: and even in the case of a
triable issue on a fair and reasonable defence, the Defendant is
ordinarily entitled to unconditional leave to defend. In case of doubts
about the intent of the Defendant or genuineness of the triable issues as
also the probability of defence, the leave could yet be granted but while
imposing conditions as to the time or mode of trial or payment or
furnishing security. Thus, even in such cases of doubts or reservations,
denial of leave to defend is not the rule; but appropriate conditions maySignature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
be imposed while granting the leave. It is only in the case where the
Defendant is found to be having no substantial defence and/or raising no
genuine triable issues coupled with the court’s view that the defence is
frivolous or vexatious that the leave to defend is to be refused and the
Plaintiff is entitled to judgment forthwith. Of course, in the case where
any part of the amount claimed by the Plaintiff is admitted by the
Defendant, leave to defend is not to be granted unless the amount so
admitted is deposited by the Defendant in the court.
33.3. Therefore, while dealing with an application seeking leave to
defend, it would not be a correct approach to proceed as if denying the
leave is the rule or that the leave to defend is to be granted only in
exceptional cases or only in cases where the defence would appear to be
a meritorious one. Even in the case of raising of triable issues, with the
Defendant indicating his having a fair or reasonable defence, he is
ordinarily entitled to unconditional leave to defend unless there be any
strong reason to deny the leave. It gets perforce reiterated that even if
there remains a reasonable doubt about the probability of defence,
sterner or higher conditions as stated above could be imposed while
granting leave but, denying the leave would be ordinarily countenanced
only in such cases where the Defendant fails to show any genuine triable
issue and the court finds the defence to be frivolous or vexatious‖
27 Concerning the examination of defences in summary suits, Vipin
Singh established that patently false defences regarding lost instruments
would not entitle the defendant to leave to defend. The principle was
reinforced in Swaranjit Singh Sayal where technical objections were
rejected and the Court insisted on proper scrutiny of documentary evidence.
The relevant paragraph reproduced herein is as under:
19. In a case like the present where the claim of the plaintiff is for a
fixed amount of money, based on a receipt which clearly sets out the
background in which the amount of Rs. 2 crores was received by the
defendant and on a cheque for Rs. 1 crore, payment whereof towards
the sale consideration is also admitted by the defendant, the acceptance
of the defendant’s plea that the suit is not maintainable under Order
XXXVII would only prolong litigation, which course of action the Court
must avoid. Once it is clear that the defendant unequivocally admits the
receipt of the entire sum of Rs. 3 crores from the plaintiff towards the
sale consideration of the aforesaid property, the sale deed in respect
whereof was never executed, his technical plea that the suit is not
maintainable under Order XXXVII CPC deserves to be rejected.‖
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
28 Similarly, in Abhay Kumar Jha, the Court has held as under:
―17. Although the foregoing discussion would show that the respondent
has a strong case for recovery of the claimed dues, i.e., the principal
amount, without a trial, the suit could not have been decreed since the
defence put forth by the appellant is that he did not receive the goods and
services. There are, even as per learned counsel appearing on behalf of
the respondent, no receipts on record. Ordinarily, when services or
goods are delivered, some documentation would be generated to show
dispatch/delivery. This aspect attains criticality with regard to goods that
the respondent claims to have supplied. Respondent, concededly, has not
placed on record, goods/lorry receipts or other evidence which would
establish the transportation of goods to the consignee i.e., the appellant.
18. Learned counsel appearing on behalf of the respondent submits that
since replies to the emails dated 27th November, 2017, 14th March, 2018
and 20th April, 2018, did not dispute receipt of goods or services,
documents evidencing the same were not placed on record.
19. It is important to note that the appellant claims that he had entered
other transactions with the respondent apart from those captured in the
three invoices referred to in the plaint. Given this position, in our view,
the defence raised by the appellant may be ―improbable‖ but it still
raises a possibility of its being correct and hence would be covered
under the situation envisaged in paragraph 17.4 of the aforementioned
judgment in IDBI Trusteeship Services Ltd. (supra).‖
29 Thus, the spectrum of judicial discretion while adjudicating on an
application for leave to defend extends from unconditional leave in cases of
substantial or fair defence, to conditional leave in cases involving doubt as to
bona fides or plausibility, to outright refusal in cases of manifestly frivolous
pleas. The discretion, while wide, must be exercised judicially, balancing the
legislative objective of expediency with the fundamental requirement of
affording a fair opportunity to defend.
30 Recently, this Court in Vidya Projects Private Limited V. Essel
Infraprojects Limited & Ors18, while taking note of some of the aforesaid
18
2025:DHC:7172
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
decisions, held that where the Defendant discloses triable issues indicative of
a fair, bona fide, or reasonable defence, the ordinary course is to grant
unconditional leave, save where compelling and cogent reasons necessitate
departure from this norm. It was also held that even in instances where a
reasonable doubt persists regarding the plausibility of the defence, the Court
may, in the interests of justice, impose calibrated conditions, reserving
outright refusal strictly for those rare cases where no genuine triable issue is
demonstrated and the defence is manifestly frivolous or vexatious. Thus, it
was reiterated that conditional leave operates as an intermediate safeguard.
The relevant extract of the decision in Vidya Projects reads as under: –
―32. Where the Defendant discloses triable issues indicative of a fair,
bona fide, or reasonable defence, the ordinary course is to grant
unconditional leave, save where compelling and cogent reasons
necessitate departure from this norm.
33. Even in instances where a reasonable doubt persists regarding the
plausibility of the defence, the Court may, in the interests of justice,
impose calibrated conditions, reserving outright refusal strictly for
those rare cases where no genuine triable issue is demonstrated and
the defence is manifestly frivolous or vexatious. Between the broad
spectrum of substantial defence and frivolous or vexatious defence,
there lies a myriad set of circumstances which require the Court to
enter into a delicate judicial inquiry. These circumstances evolve on a
case to case basis, and no amount of linguistic gymnastics could fit
these circumstances into rigid compartments. Ultimately, the test is
whether, on an overall assessment of the case, a fair and reasonable
defence is in sight, which could only be determined upon trial and
appreciation of evidence. If yes, the Court must not shut the doors at
the outset. However, depending on the plausibility of the defence,
conditions could be imposed so as to safeguard the interests of the
plaintiff as well as to uphold the integrity of the summary procedure.
Thus, conditional leave operates as an intermediate safeguard,
harmonising the imperatives of commercial celerity with the principles
of natural justice‖
31 Having examined the trite law, it is also imperative to consider the
decisions relied upon by the defendants to contend that, in the facts of the
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
instant case, the leave to defend ought to be granted on the ground of triable
issues.
32 Regarding the maintainability of summary suits against legal
representatives, a Division bench of this Court in Sarla Devi, had held that
the summary procedure under Order XXXVII of CPC could not be invoked
against the legal heirs of a deceased defendant, as their liability is limited to
the deceased’s estate. The aforesaid explication of law was subsequently
reconsidered in Sanjeev Jain, a decision relied upon the plaintiff, where the
Court distinguished between monetary claims and personal obligations,
holding that summary suits could proceed against legal representatives for
pure money claims.
33 Recently, the Supreme Court in Vinayak Purshottam Dube
(Deceased) held that while legal heirs may be liable for monetary claims to
the extent of the inherited estate, obligations requiring personal performance
or specialized skills of the deceased cannot be enforced against Legal
representatives. Relevant paragraphs have been reproduced as under:
39. Therefore, if the estate of the deceased becomes liable then the
legal representatives who in law represent the estate of a deceased
person or any person who intermeddles with the estate of the deceased
and where a party sues or is sued in a representative character, the
person on whom the estate devolves on the death of the party so suing
or sued is liable to the extent the estate has devolved. Hence, what is
crucial is that the estate of a deceased person which becomes liable
and the legal representatives must discharge their liability to a decree-
holder or a person who has been granted an order to recover from the
estate of the deceased which they would represent and not beyond it.
40. But in the case of a personal obligation imposed on a person under
the contract and on the demise of such person, his estate does not
become liable and d therefore, the legal representatives who represent
the estate of a deceased would obviously not be liable and cannot be
directed to discharge the contractual obligations of the deceased.
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
***
42. This position is also clear on a reading of Section 50 CPC which
states as under
―50 Legal representative (1) Where a judgment-debtor dies before the
decree has been fully satisfied, the holder of the decree may apply to
the Court which passed it to execute the same against the legal
representative of the deceased. (2) Where the decree is executed
against such legal representative, he shall be liable only to the extent of
the property of the deceased which has come to his hands and has not
been duly disposed of; and, for the purpose of ascertaining such
liability, the Court executing the decree may, of its own motion or on
the application of the decree-holder, compel such legal representative
to produce such accounts as it thinks fit‖
43. Thus, any decree which is relatable to the extent of the property of
the deceased which has come to the hands of the legal representatives
and has not been duly disposed of, the same would be liable for
execution by a decree-holder so as to compel the legal representatives
to satisfy the decree. In this context, even a decree for preventive
injunction can also be executed against the legal representatives of the
deceased judgment-debtor if such a decree is in relation to the property
or runs with the property if there is a threat from such legal
representatives.
44. In view of the aforesaid discussion, we hold that the legal
representatives of the deceased opposite party-appellants herein are
not liable to discharge the obligation which had to be discharged by the
deceased opposite party in his personal capacity and hence that portion
of the impugned orders of NCDRC, State Commission and District
Forum are set aside. Needless to observe that the direction for
payments shall be made by the legal representatives from the estate of
the deceased opposite party if not already satisfied
34 Taking a stern approach, this Court in Vijay Singh while considering
an application for leave to defend in a summary suit under Order XXXVII
of CPC based on dishonoured cheques presented after the death of the
drawer, has held as under:-
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed Signing Date:27.08.2025 By:PURUSHAINDRA 10:00:57 KUMAR KAURAV
― 12. Section 30 also requires due notice of dishonour to be given to
the drawer of the cheque for maintaining a claim for compensation on
account of dishonour of the cheque. Thus, the dishonour of the cheque
is actionable under Order 37 of the CPC only if notice of dishonour has
been given to the drawer. If the drawer is dead on the date of dishonour
or even on the date of presentment, no notice can possibly be given to
him. That also leads to the inevitable conclusion that in such a
eventuality no suit under Order 37 of the CPC is maintainable on the
basis of a cheque.
13. It is to be noted that the drawing of a cheque does not by itself
operate as an assignment of the monies in the hands of the banker in
favour of the payee. The holder of a cheque has no right to enforce
payment from the bank unless the banker has contracted with the
holder to honour. The banker is only liable to the order of the drawer
and thus if there is no order of the drawer on the banker, on the date of
the presentment owing to the death of the drawer, the bank is not liable
to pay. Section 57 provides that the legal representatives of a deceased
person cannot negotiate by delivery only a cheque payable to order and
endorsed by the deceased but not delivered. This is on the ground that
the legal representative is not the agent of deceased. Upon demise, the
estate including the amounts with the bank vest in the legal
representatives or nominee and it requires a fresh act on the part of the
legal representative or nominee to transfer the money, if any. Only if
the cheque had been signed by the legal representative, at the instance
of holder thereof does the legal representative becomes personally
liable thereunder, under Section 29of the Act.
***
21. Under the provisions of the Negotiable Instruments Act, the cheque
only raises rebuttable presumption of having been issued for
consideration. Thus at the stage of grant to leave to defend, it has to be
seen, in which case an opportunity for rebutting the presumption is to
be given. Merely because the suit is filed against the legal
representatives of the drawer, is no ground for grant of leave to defend,
if otherwise the Court is convinced that no case for giving an
opportunity for rebutting the presumption is made out. The contention
of the Counsel for the defendant that, whenever the suit is against legal
representatives, leave has to be granted, thus cannot be accepted.‖
35 Thus, the Court in Vijay Singh emphasised that while acknowledging
that suits could be maintained against legal heirs, the mere possession of
cheques signed by the deceased would not automatically entitle the holder to
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
summary judgment, particularly where the circumstances raised legitimate
doubts about the existence of debt.
36 A bare perusal of the aforesaid explicates that a summary suit under
Order XXXVII of CPC may not lie against legal representatives of a
deceased defendant in respect of personal obligations which do not devolve
upon the estate, but where the claim is purely monetary, the estate remains
liable and the legal representatives, to the extent they inherit and represent it,
can be proceeded against. The liability in such cases is strictly limited to the
value of the estate, and they cannot be compelled to discharge obligations
beyond it. The Court must at the threshold determine whether a genuine
triable issue exists in the circumstances of each case.
Factual Analysis
37 Upon the compendium of the aforesaid legal explication, a detailed
perusal of the facts is necessary.
38 The Plaintiff’s case, as pleaded, is that in August 2021, late Mr.
Surender Malik approached her for a short-term loan of ₹5,00,00,000/-.
39 The record reflects that pursuant to a request by late Mr. Surender
Malik, the Plaintiff advanced a loan of ₹5,00,00,000/-. under a Loan
Agreement dated 18.08.2021, carrying 12% p.a. interest, repayable within
one year, with monthly interest payable by the 7th of each month through
RTGS/NEFT/IMPS, disbursed via two cheques and secured by a Demand
Promissory Note. It is stated that between 25.11.2021 to 13.07.2022, Mr.
Malik availed four additional loans.
40 On 18.08.2022, the first loan was renewed through a “Renewed Term
Sheet” extending repayment till 17.08.2023, supported by a fresh Demand
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
Promissory Note of ₹5 crores. Payments made thereafter included ₹1.5
crores towards principal on 10.04.2023 and ₹7,70,000/- towards April 2023
interest on 09.05.2023.
41 Mr. Malik expired on 09.06.2023, after which, as per Plaintiff’s case,
further sums were received towards principal. The Plaintiff, a senior citizen
allegedly dependent on loan interest and claiming non-receipt of payment
for the last 1.5 years, seeks recovery of ₹7,75,21,689/- under Order XXXVII
of CPC.
42 To substantiate the claim, the Plaintiff has placed reliance on various
Loan Agreements duly executed between the Plaintiff and late Mr. Surender
Malik. These agreements bear the signatures of late Mr. Surender Malik,
thereby establishing the existence of a binding contractual relationship and
acknowledgement of the debt by him.
43 In addition to the aforesaid, the Plaintiff has produced several Demand
Promissory Notes executed by late Mr. Surender Malik in favour of the
Plaintiff. These instruments further evidence the promise and obligation of
repayment undertaken by the said late Mr. Surender Malik towards the sums
advanced. The Plaintiff has also relied upon various acknowledgement
Receipts signed by late Mr. Surender Malik, which clearly record and
confirm the receipt of monies from the Plaintiff under the loan transactions.
Such acknowledgements serve as further proof of the admitted liability.
44 Furthermore, the Plaintiff has brought on record various WhatsApp
chats and audio messages sent by Defendant Nos. 1 and 2, wherein they
have expressly assured payment of the outstanding amounts due to the
Plaintiff. These communications, when read in conjunction with the
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
documentary evidence, fortify the Plaintiff’s case beyond any manner of
doubt.
45 Conversly, the Defendants dispute the Plaintiff’s case, terming it
misleading and suppressive of material facts. It is stated by them that late
Mr. Malik, husband of Defendant No. 1, father of Defendants 2 and 3, and
son of Defendants 4 and 5, was in the mining and infrastructure business and
had agreed to assist the Plaintiff in investing her funds.
46 According to the Defendants, the Plaintiff approached late Mr. Malik
through Smt. Kiran Choudhry, seeking assistance in deploying her funds
into business ventures. As per their case, being under investigation by
enforcement agencies in a coal mine allocation case, she sought alternative
investment channels.
47 It is also their case that relying on these representations, late Mr.
Malik agreed to act solely as an intermediary to facilitate such investments
as per the Plaintiff’s instructions. Further, it is stated that the sums received
were either reinvested or transferred to third parties nominated by the
Plaintiff, and the loan agreements were allegedly a formality for accounting
and tax purposes, without any binding borrower-lender relationship.
48 The Defendants maintain that all returns on investments and principal
sums were duly paid back to the Plaintiff, and no liability remained
outstanding. They submit that the suit is based on a mischaracterisation of
the transactions and is liable to be dismissed.
49 The rival submissions of the parties manifest two entirely conflicting
narratives regarding the nature of the impugned transactions. The
aforementioned rival narratives strike at the very foundation of the
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
Plaintiff’s cause of action and thus make the dispute unsuitable for summary
determination at this stage.
50 It is also pertinent to observe that the evidentiary material relied upon
by the Plaintiff, namely WhatsApp conversations and audio recordings
allegedly containing assurances by Defendant Nos. 1 and 2, cannot be
treated as conclusive proof at the present juncture.
51 Being electronic records, their admissibility and evidentiary value
must necessarily be tested in accordance with the strict mandate of the extant
laws. Unless the requisite certification and proof of authenticity are
furnished, such documents cannot be relied upon in isolation to fasten
liability. Similarly, the loan agreements, promissory notes, receipts, and
other contemporaneous writings bearing signatures of the Defendants will
require proper proof by way of examination of witnesses and cross-
examination. Mere production does not suffice for conclusive proof of
liability.
52 Upon the aforesaid conspectus, it is evident that the defence raised
cannot be brushed aside as illusory or sham. On the contrary, the Defendants
have raised substantive and bona fide issues touching upon material
questions of fact, including: (i) the true character of the transactions; (ii) the
validity and enforceability of the agreements against the legal
representatives; (iii) the authenticity, admissibility, and the evidentiary value
of electronic communications, amoungst any other. These issues cannot be
adjudicated without a full-fledged trial and subsequent to evidence being led
by the parties.
53 Moreover, it is equally clear that the Plaintiff has placed on record
documents, such as agreements, promissory notes, and communications,
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
which do prima facie indicate that certain financial transactions did transpire
between the parties, and cannot be disregarded at this stage. While their
ultimate evidentiary worth can only be tested at trial, their existence
warrants a conditional leave to defend.
54 Accordingly, the present case warrants the grant of conditional leave
to defend under Order XXXVII of CPC. Such a conditional leave would
strike a balance between the competing interests of both parties.
55 Imposition of conditions such as deposit of a part of the suit amount,
or furnishing of security, would serve the ends of justice by ensuring that the
Plaintiff’s claim is not rendered illusory in the event of a favourable decree,
while permitting the Defendants an opportunity to establish their defence at
trial.
56 Thus, without expressing any conclusive opinion, the Court deems it
appropriate to grant conditional leave to defend to Defendants. Furthermore,
in the interest of expeditious disposal and to safeguard the ends of justice,
the Court imposes the following conditions upon Defendants:
(i) Defendants shall not seek any unwarranted or dilatory
adjournments; The proceedings shall be expedited, with all parties extending
full cooperation to ensure timely progress.
(ii) Defendants shall place on record, before the next date of
hearing, a duly sworn affidavit disclosing their assets in compliance with
applicable legal requirements;
(iii) Defendants shall deposit a sum of ₹ 3,00,00,000/- with the
Registrar General of this Court within six weeks from today. The said
amount shall be forthwith invested in an interest-bearing fixed deposit
account, with an auto-renewal facility, until further orders of this Court.
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed Signing Date:27.08.2025 By:PURUSHAINDRA 10:00:57 KUMAR KAURAV
60. Accordingly, the instant application stands disposed of.
CS(OS) 360/2024, I.A. 10148/2024, I.A. 30317/2024, I.A. 30859/2024, I.A.
30949/2024, I.A. 34332/2024, I.A. 46912/2024 and I.A. 49224/2024
1. Let the matter to continue to proceed before the concerned Joint
Registrar on 14.10.2025.
2. Thereafter, list before the Court on the date to be assigned by the
concerned Joint Registrar.
(PURUSHAINDRA KUMAR KAURAV)
JUDGE
AUGUST 25, 2025
Signature Not Verified Signature Not Verified
Signed By:PRIYA Signed
Signing Date:27.08.2025 By:PURUSHAINDRA
10:00:57 KUMAR KAURAV
[ad_2]
Source link