PenguIn Books Limited Vs. Book Sales Company and anr. - Court Judgment

Excerpt:
civil procedure code, 1908 - order 37 rule 3(5)--suit for recovery--unconditional leave to defend-defendants deposited the amount before the court--transaction governed by oral agreement between the parties--plaintiff supplied books according to the condition of payment within 180 days--no objection having been taken to the invoices issued within a reasonable time--defense raised by them appears to be fair and reasonable and cannot be said to be frivolous or vexatious--application is allowed and an unconditional leave to defend the suit is granted to the defendants.; though the plaintiff has denied the receipt of four letters, allegedly written by the defendants to them, but there is no reference to the letter dated 11 august 1997, leave alone denial of any sort. apart from the fact that an implied contract, which the plaintiff would seek to rely upon to prove its case, is outside the purview of order 37, cpc, even the plea of the defendants about an implied acceptance of terms and conditions of supply contained in defendants' letter dated 11 august 1997 (copy placed on record) would give rise to a triable issue. on this aspect of the matter i say no more, lest it may prejudice the case of the either side. suffice it to say that the defendants have been successful in showing that they have a substantial defense and triable issues to raise. the defense raised by them appears to be fair and reasonable and cannot be said to be frivolous or vexatious. - - 6. although the principles to be followed while dealing with an application seeking leave to defend are well established but still no straight jacket formula, which could be uniformly applied in every case, can be laid down to decide an application one way or the other. however, in order to be entitled to an unconditional leave to defend, it is incumbent upon a defendant to show that he has a good defense to the claim on merits and a triable issue is raised, indicating that he has a fair or bona fide or reasonable defense.d.k. jain, j. 1. by this application under order 37 order 3(5) of the code of civil procedure code (for short 'cpc'), the defendants seeks unconditional leave to defend the suit instituted by the plaintiff for recovery of the price of goods sold, together with interest. in the application it is, inter alia, claimed that no amount is due to the plaintiff from the defendants; the suit as framed does not fall within the ambit of order 37 cpc and the defendants have substantial defense to put forth.2. as per the plaint the suit is for recovery of fixed liquidated demand in money payable by the defendants to the plaintiff with interest arising on anenactment i.e. on four invoices raised against the defendants for the supply of books. according to the plaintiff, on defendant no. 2's assurance that thepayment would be made within 180 days of the date of supply, books were sold to the defendants. however, on demand, the defendants refused to liquidate their liability towards the plaintiff and, thereforee, the present suit under order 37 cpc had to be filed for recovery of pound sterlings 14895/50, with interest.3. in the application it is stated that since the plaintiff has founded its claim on the invoices allegedly issued to the defendants, the claim cannot be said to be arising on an enactment within the meaning of order 37 rule 1(2)(b)(ii) cpc; the transaction in question was to be governed by an agreement arrived at between the parties orally in the first instance, but reiterated by the defendants vide their registered letter dated 11 august 1997 to the plaintiff; as per the agreed terms and conditions the defendants made every attempt to sell the books at a price to match the invoice price, together with expenses incurred and 10% profit thereon, but they were unable to recover even the freight and other charges (agreed to be deducted there from); the consignments of books supplied were sold by the defendants for a total sum of rs. 3,05,000/- whereas the expenses incurred by them in respect of clearing charges, freight, godown charges etc., along with 10% profit due to them, amounted to rs. 3,21,149/- and, thereforee, the defendants are not liable to pay any sum to the plaintiff. it is also claimed that in fact the plaintiff is liable to pay a sum of rs. 16,149/- to the defendants towards the said transaction as per the terms and conditions agreed upon between the parties.4. the application is resisted by the plaintiff inter alias on the ground that the defense raised by the defendants is illusory and not believable; since theplaintiff has admittedly sold the books to the defendants for rs. 3,05,000/- the defendants should deposit the said amount in court in terms of the second proviso to order 37 rule 3(5) cpc and no objection having been taken to the invoices issued within a reasonable time, the pleas with respect to the quality and the price of the books supplied, now being raised, are frivolous and afterthoughts. though issue of various letters by the defendants is disputed by the plaintiff but there is no reference to the letter dated 11 august 1997 allegedly issued by the defendants to the plaintiff.5. i have heard ms. rekha palli for the plaintiff and mr. anil sapra for the defendants.6. although the principles to be followed while dealing with an application seeking leave to defend are well established but still no straight jacket formula, which could be uniformly applied in every case, can be laid down to decide an application one way or the other. each case has to be considered and decided on its own peculiar facts and circumstances. however, in order to be entitled to an unconditional leave to defend, it is incumbent upon a defendant to show that he has a good defense to the claim on merits and a triable issue is raised, indicating that he has a fair or bona fide or reasonable defense. but, if, in the affidavit, the defendant discloses such facts, which show that at the trial he may be able to establish a defense to the plaintiff's claim, conditional leave to defend may be granted. however, if the defense is sham or illusory or practically moonshine, a defendant is not entitled to leave to defend. at the same time, it must be borne in mind that while examining the question whether the defense is bona fide and honest, in the absence of the evidence of the parties, it would be unfair to record a categorical finding on such matter. at this stage, it has to be a prima facie view, to be decided finally after the full trial. needless to add that if the court feels that the defendant does not deserve leave to defend, it shall pronounce its final opinion on the nature of the defense disclosed before it signs the judgment in favor of the plaintiff.7. coming to the facts of the present case, as noted above, the plaintiff has founded its claim as arising on an enactment and not on a written contract. on the contrary, the stand of the defendants is that section 55 of the sale of goods act, 1930, on which reliance is placed by the plaintiff, is not applicable on the facts of the instant case as the supply of bookswas made in terms of the arrangement allegedly communicated by the defendants to the plaintiff vide their registered letter dated 11 august 1997.8. sub-section (1) of section 55 of the sale of goods act provides that where under a contract of sale the property in the goods has passed to the buyer, the seller may sue the buyer for the price of the goods. from a bare reading of the section it is evident that a seller can sue a buyer under the said provision provided all the four conditions stipulated therein, namely (1) the property in the goods has passed to the buyer; (2) the property has passed under the contract of sale; (3) the buyer has wrongfully neglected orrefused to pay the price and (4) the price has become payable under the terms of the contract, are fulfillled. all the four conditions are cumulative.9. it is apparent from the said section that the claim for price of goods must arise from the terms of the contract of sale. as noticed above, theplaintiff has not founded its case on a written contract. on the contrary, as noticed above, the defendants base their defense on some terms and conditions mutually agreed upon orally and communicated to the plaintiff by a registered letter. merely because the said act enables the seller to sue thebuyer for price, it cannot be said that the claim per se arises on an enactment. the cause of action does not automatically flow from or on an agreement unless it is shown by the plaintiff by stating so and proving that his right to recover arises out of and depends on an enactment. since in the present case the claim in the plaint for price of goods sold and delivered arises from the terms of a contact, it cannot be said to arise on an enactment and would, thereforee, not fall within the ambit of sub-clause (ii) of clause (b) of sub-rule (2) of rule 1 of order 37 cpc. support is lent to this view by a division bench judgment of thecalcutta high court in west bengal decorating company v. damodar das daga : air1982cal386 .10. furthermore, in reply to the application, though the plaintiff has denied the receipt of four letters, allegedly written by the defendants to them, but there is no reference to the letter dated 11 august 1997, leave alone denial of any sort. apart from the fact that an implied contract, which the plaintiffwould seek to rely upon to prove its case, is outside the purview of order 37 cpc, even the plea of the defendants about an implied acceptance of terms and conditions of supply contained in defendants' letter dated 11 august 1997 (copy placed on record) would give rise to a triable issue. on this aspect of the matter i say no more, lest it may prejudice the case of the either side. suffice it to say that the defendants have been successful in showing that they have a substantial defense and triable issues to raise. the defense raised by them appears to be fair and reasonable and cannot be said to be frivolous orvexatious.11. for the foregoing reasons, the application is allowed and an unconditional leave to defend the suit is granted to the defendants. let the written statement be now filed by the defendants within six weeks. replication, if necessary, may be filed by the plaintiff within four weeks thereafter. the parties shall also file the original documents in their power or possession within two weeks of the completion of pleadings.12. list the case before the joint registrar for admission/denial of the documents on 11 july 2002. thereafter, the suit will be listed in court on 31 july 2002, for framing of issue.the application stands disposed of accordingly.