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Fortuna Infrastructures India Private Ltd., rep. by its Authorized Director, Hyderabad v/s M/s. Shiva Creative Constructions, rep. by its Proprietor, Hyderabad

    C.R.P.No. 1725 of 2010
    Decided On, 14 July 2010
    At, High Court of Andhra Pradesh
    For the Petitioners: Mr. D. Prakash Reddy, Senior Counsel for Mr. Rama Mohan Palanki, Advocates. For the Respondent: Mr. B. Purushotham Reddy and Mr. Shashikanth Shukla, Advocates.

Judgment Text
The respondent filed O.S.No. 725 of 2008 in the court of Chief Judge, City Civil Court, Hyderabad, against the petitioner, for recovery of a sum of Rs.24 crores, covered by a cheque issued by the petitioner herein by invoking the procedure under Order XXXVII Rule 3(4) of C.P.C. After registering the suit, the trial Court issued summons in the prescribed form. On receipt of the same, the petitioner filed I.A.No. 481 of 2009 under Rule 3(5) of Order XXXVII C.P.C., with a prayer to grant leave to defend the case. In the affidavit filed in support of I.A., several facts, in relation to the dispute, were mentioned, and ultimately, it was urged that there existed a triable issue. The I.A. was opposed by the respondent. The trial Court dismissed the application through its order, dated 01-06-2009. The same is challenged in this revision.

2. Sri D. Prakash Reddy, learned Senior Counsel appearing for the petitioner, submits that the trial Court did not take into account the fact that there existed an arrangement between the parties for payment of the amount, and unless the terms of the agreement, as amended from time to time, are ascertained and the legal implication thereof is determined, the suit cannot be decreed, in a summary manner. He contends that though a tripartite agreement was entered into on 12-11-2007, it was substantially modified through a subsequent agreement, dated 27-03-2008, and without even making a reference to the contents thereof, the I.A. was dismissed. He submits that, as of now, the possession of the land, in respect of which a sale deed was executed for and on behalf of the respondent in favour of the petitioner, was not delivered. Learned Senior Counsel further submits that the trial Court, on the one hand, observed that the agreement, dated 27-03-2008 is not filed, and on the other hand, made an indirect reference to the contents thereof, which are contrary to the record.

3. Sri B. Purushotham Reddy, learned counsel appearing for the respondent, submits that the amount sought to be recovered in the suit represents part of sale consideration of a property for which the civil Court has executed the decree in favour of the petitioner and though a cheque was issued for the suit amount, it could not be realized for want of arrangements on the part of the petitioner. He further submits that the petitioner does not fulfill the ingredients of Order XXXVII C.P.C. for grant of leave to defend. Another contention of the learned counsel is that, if the Court is inclined to grant leave, the petitioner must be made to comply with the second proviso to Rule 3 of Order XXXVII C.P.C. He contends that the revision is not maintainable, since the suit has been decreed, after dismissal of the I.A.

4. Before discussing the matter on merits, the objection raised by the learned counsel for the respondent, as to the maintainability of the revision, needs to be considered. In the ordinary course of things, once a suit is decreed by a trial Court, any orders passed in the interlocutory applications, in that suit, merge into the decree, and revisions, or appeals, pending against the orders in the interlocutory application, become infructuous. Where, however, the very decree in the suit is dependent upon an order passed in the interlocutory application, such a course would not ensue. Even if the suit is decreed, the Appellate Court, or the Court of revision, can passed in the interlocutory applications and the result thereof, would certainly have its own impact upon the result of the suit itself. The suits filed under Order XXXVII C.P.C. fall into this category.

5. In Lakshmi Manohar Saraswathi v. Kantipudi Ramakrishna(1), 1982 (1) AnWR 242, this Court dealt with this very issue. After referring to the judgments in S.K. Bharadwaj v. M.L. Gupta (2) AIR (2) 1977 Delhi 226, Rangaiah v. Peddireddi (3) 1956 ALT 601 = 1956 An.W.R. 776 = AIR (3) 1957 A.P. 330 and Shama Pershad Ray Chowdry v. Hurro Purshad Ray Chowdry (4) (1863-66) in 10 Moors Ind. Ap. 2003 (P.C), rendered by the Privy Council, this Court held that where the suit is dependent upon the interlocutory orders, the decree passed therein would remain only as long as the orders in the interlocutory petitions are not reversed or superseded. The following observation of the Privy Council was noted:

?It is a well-settled principle of law that certain orders and decrees which are subordinate and dependent upon earlier orders or decrees could only remain in force so long as the orders or decrees on which they were dependant are not reversed or superseded.?

Hence, the objection cannot be sustained.

6. Coming to the merits of the revision, the respondent obtained a decree for specific performance of an agreement of sale from the Court of IV Senior Civil Judge, City Civil Court, Hyderabad, in O.S.No. 1402 of 1996, in respect of about 15 acres of land in old survey No. 227 of Mqta Somajiguda, Hyderabad. It is in the course of execution of decree thereto, that a tripartile agreement with the participation of the respondent, petitioner and another party came into existence on 12-11-2007. That constituted the basis for execution of a sale deed by the trial Court in favour of the petitioner in the form of post dated cheque, dated 16-03-2008 drawn on Axis Bank. According to the terms of agreement, the cheque must be presented after some time. Stating that the amount was not realized when the cheque was presented, the present suit was filed by invoking procedure under Order 37 C.P.C.

7. In the I.A. filed by the petitioner seeking leave to defend, extensive reference was made to a subsequent agreement, dated 27-03-2008. It was stated that the amount covered by the cheque was converted into the one of loan, and it shall carry interest, and in that view of the matter, the suit claim is without basis. The application was opposed by the respondent.

8. The trial Court was mostly impressed by the fact that the petitioner issued a cheque, dated 16-03-2008, for Rs.24 crores and that the same was mentioned in the agreement, dated 12-11-2007. The plea of the petitioner that the agreement, dated 12-11-2007 was modified and altered subsequently was not accepted in its entirety. The reason mentioned by the trial Court is that the copy of the agreement, dated 27-03-2008 was not made part of record and any agreement subsequent to the one dated 12-11-2007, can be only temporary in nature.

9. Both the assumptions of the trial Court are incorrect. Firstly, the agreement dated 27-03-2008 was mentioned in para 6 of the plaint itself. The respondent not only admitted the existence of such an agreement, but also stated that it was subsequently terminated. Therefore, the respondent was under obligation to make the agreement, dated 27-03-2008, as well as the document, dated 27-03-2008, as well as the document, or notice, through which it was said to have been cancelled, as part of record. The petitioner asserts that the copy of the agreement was filed and the seal of the Court was also put upon it. Even assuming that the petitioner did not file it, once it is mentioned in the plaint, its existence ought not to have been doubted. Secondly, the question, as to whether the arrangement under the agreement, dated 27-03-2008, is temporary in nature, or otherwise, could have been determined only after noting the contents thereof. An observation made about the nature of the agreement, without making reference to its contents, is difficult to sustain.

10. In the facts and circumstances of the case, this Court is of the view that the petitioner deserves to be given an opportunity to defend itself in the suit. At the same time, interests of the respondent need to be protected. If ones takes into account the fact that,

(a) the suit amount represents part of sale consideration in respect of a property for which sale deed was already executed by a Court of law; and
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/> (b) under the subsequent agreement, 27-03-2008, the amount is only treated as loan, and the liability of the petitioner is not wiped away; the second proviso to Rule 3 of Order XXXVII C.P.C., gets attracted. 11. Therefore, the C.R.P. is allowed and the order under revision is set aside. Consequently, I.A.No. 481 of 2009 is allowed, and the petitioner is granted leave to defend itself in the suit, subject to the condition that it shall deposit the suit amount into the trial Court in monthly installments of Rs.6 (six) crores, each, payable on, or before, 10th of every month, commencing from August, 2010. The decree passed by the trial Court in O.S.No. 725 of 2006, shall stand set aside. If the petitioner commits default in payment of any of the installments, the leave to defend, shall stand forfeited. 12. There shall be no order as to costs.