Defendant's Causal Approach Not Sufficient: Delhi High Court Dismisses Leave to Defend Application in Recovery Suit

Justice Jasmeet Singh emphasizes strict adherence to timelines in summary suits under Order XXXVII of the CPC. In a significant ruling, the Delhi High Court dismissed the application for leave to defend filed by the defendant in a recovery suit under Order XXXVII of the Code of Civil Procedure, 1908 ("CPC"). The court, presided over by Justice Jasmeet Singh, stressed the mandatory nature of timelines in summary suits, underscoring that a casual approach in filing delays cannot be condoned. The suit, filed by M/S Today Realty Private Limited and an associated LLP, sought recovery of substantial sums advanced for property transactions that failed to materialize as agreed.

The plaintiffs, M/S Today Realty Private Limited and an LLP, filed a suit for recovery of Rs. 5,74,78,068 and Rs. 1,01,24,863 respectively, against the defendant, Gunveen Singh. The plaintiffs had entered into agreements with the defendant for the purchase of agricultural land and the redevelopment of a property in Defence Colony, New Delhi. Despite advance payments totaling Rs. 4.5 crores, the defendant failed to fulfill his contractual obligations and subsequently issued cheques that were dishonored. The plaintiffs sought recovery of the amounts paid, plus interest.

Justice Jasmeet Singh noted the importance of strict adherence to procedural timelines in summary suits under Order XXXVII of the CPC. The court observed that the reasons provided by the defendant for the delay in refiling the leave to defend application were inadequate and demonstrated a lack of due diligence and care.

"The averment in the application seeking condonation is made in a casual manner without explaining the defects or as to how the present counsel or the defendant communicated with the earlier counsel," remarked Justice Singh, emphasizing the significance of timely and diligent action in legal proceedings.

The defendant contended that he had made partial payments and that the remaining claims were based on misused blank cheques given as security for a friendly loan. However, the court found the defendant's claims unsubstantiated and the purported cancellation agreements, allegedly canceling the initial agreements, were deemed fabricated.

"The defendant has not stated anywhere in his leave to defend application as to how he has arranged a huge sum of Rs. 2.45 crores in cash," the judgment noted, highlighting the inconsistencies and lack of credible evidence in the defendant's defense.

The court reiterated the principles established by the Supreme Court regarding the grant and refusal of leave to defend applications, focusing on whether the defense raised triable issues or was frivolous and vexatious. The defendant's failure to act with due care and diligence, along with the lack of genuine triable issues, led to the rejection of the leave to defend application.

"From the above, it emerges that while hearing leave to defend application, the Court has to only scrutinize the leave to defend application and to see if the defendant has raised any triable issue. If so, then unconditional leave to defend must be granted," the judgment clarified.

Justice Jasmeet Singh remarked, "The object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security."

The dismissal of the defendant's leave to defend application underscores the judiciary's commitment to ensuring timely and efficient resolution of commercial disputes. The judgment reinforces the importance of adherence to procedural timelines and the necessity for defendants to present credible and substantial defenses. This decision is expected to have significant implications for the handling of summary suits under Order XXXVII of the CPC, emphasizing the need for due diligence and prompt action in legal proceedings.

Date of Decision: July 18, 2024

M/S Today Realty Private Limited and Anr. vs. Gunveen Singh