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suit for recovery

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    Tina DU
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    Code of Civil Procedure, 1908—Order 37, Rule 3(5):
    Suit filed by the Plaintiff u/o 37 for recovery of
    commission earned for the work done by Plaintiff,
    along with interest—Application filed by the Defendant
    u/O 37 R 3(5) seeking unconditional leave to defend.
    Plaintiff entered into an agreement with the Defendants
    for procuring orders for various products—As per the
    agreement Plaintiff was earning variable commissions
    on the orders secured—Plaintiff claims that due to
    Plaintiff’s diligence, Defendants agreed to an enhanced
    flat commission rate of 10% verbally—However,
    thereafter commission was curtailed—Hence, the
    present suit. Defendants contend that for enforcement
    of verbal agreement, no suit under Order 37 CPC will
    lie—Plaintiff has filed no documents to verify the claim
    of the Plaintiff—Since case of plaintiff is not based on
    determined liability, Defendants/applicants are entitled
    to leave to defend, hence the instant application.
    Held: Agreement of enhancement of commission verbal,
    thus provisions of Order 37 Rule 1(2)(b) not applicable
    to the present case—In view of liability not being
    acknowledged, nor claim being in pursuance of a
    written agreement, Plaintiff has not made out a case
    for trial u/O 37, CPC—Defendants granted leave to
    defend.

    In my view, a suit for recovery of such an amount does
    not qualify as a suit under Order 37 of the CPC. A suit, from
    the averments in the plaint has to fall under Order 37. The
    averments in the plaint in the present case do not show as
    to on what written contract the amounts sought to be
    recovered as a debt or liquidated demand in money is
    sought to be recovered. No single document has been referred to in the plaint, wherein the suit amount is contained
    as a debt due from the defendant to the plaintiff.
    9. Order 37 of the CPC was intended to be an exception to
    the ordinary adversorial adjudicatory process adopted in
    this country and in which process certain delays owing to
    the requirement of giving opportunity of being heard and
    lead evidence were implicit. It was thought that where the
    suit was only for recovery of money on the basis of a
    document, the genuineness whereof could not be doubted
    or where owing to the existence of a written document
    disclosing the amount claimed in the suit, it was expedient to
    shift the onus to the defendant, it was enacted that the
    defendant would not be entitled to contest the suit till
    satisfies the court that he had a defence. However, I find
    myself unable to apply the said principles to the instant suit.
    I am unable to deduce from any document or documents the
    amount due. Merely because the claim is based on documents
    would not make the suit fall under Order 37 of the CPC.
    Claims in a large number of suits are based on documents
    but such suits do not fall under Order 37. Where a large
    number of documents have to be collated, interpreted and
    effect thereof to be adjudicated in juxta position of other
    documents, merely because the suit is based on documents
    would not make it fall under Order 37 of the CPC. That is
    the position in the present case.”

    REFERRED TO:

    1. Bank of India and another vs. Madura Coats Ltd., 157 (2009) DLT 240 (DB).
    2. Juki Singapore PTE Ltd. vs. Jay Cee Enterprises Pvt. Ltd. and another, 157 (2009) DLT 580.
    3. Mechalec Engineers and Mfr. vs. Basic Equipment Corporation, 1977 Rajdhani Law Reporter (SC) 184.
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    • #112119 Reply
      Tina DU
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      Earnest Money

      Hanuman Cotton Mills v. Tata Air Craft Ltd., 1969) 3 SCC 522 in which there is a detailed discussion of what is meant by earnest money and what are the consequences of deposit of such money and when can the same be forfeited. The Bench after reviewing various decisions noted in the judgment which includes that of the Privy Council rendered in Chiranjit Singh v. Har Swarup, AIR 1926 PC 1, culled out the following principles regarding the ‘earnest’ at page 139: (SCC p. 531, para 21)

      “(1) It must be given at the moment at which the contract is concluded.
      (2) It represents a guarantee that the contract will be fulfilled or,in other words, ‘earnest’ is given to bind the contract.
      (3) It is part of the purchase price when the transaction is carried out.
      (4) It is forfeited when the transaction falls through by reason of the default or failure of the purchaser.
      (5) Unless there is anything to the contrary in the terms of the contract, on default committed by the buyer, the seller is entitled to forfeit the earnest.”

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