S. Ravindra Bhat, J.

1. This is a defendants appeal against the judgment and decree in the summary suit, being Suit No. 1383/1989, for recovery of Rs.1,51,50,000/- plus interest of Rs.58,75,620/-. The appellant/defendants application seeking leave to defend the suit was dismissed on 15.10.1993.

Plaint

2. The facts alleged in the plaint are that the respondent company (hereafter "the plaintiff") engages in the business of manufacturing and selling controls and devices for refrigeration and air conditioning equipment. The defendant carries on his business under the name of Nexim/Mohan Murti, at 47, Ring Road, Lajpat Nagar, New Delhi as well as at 110/111 Pragati Tower, Rajendra Place, New Delhi. He trades under the name Nexim even in Mumbai, in an office at Nariman Point, and owned at the relevant time - a trading office under the same name at the World Trade Centre in Moscow, in the erstwhile USSR. At the time of institution of the suit, the defendant was working as a Director of Corporate Development of Escorts Ltd., New Delhi.

3. The suit alleged that the defendant, by a contract of supply dated 27.12.1985 (first contract), with the official Russian importer, Technointorg, Moscow, agreed to ship some goods manufactured by the plaintiff/respondent in West Germany, valued at Rs.2,535,000 (payment of which was to be made under the contract in Indian Rupees to the agreed account of the defendant). By a written purchase order dated 23.1.1986, (akin to the contract with the importer), for a price (amounting to DM 591,500), the defendant ordered the goods from the plaintiff. The plaintiff issued an invoice dated 4.3.1986 embodying quantities (the first invoice), prices and description of the goods to be sold and a written contract was effected. Goods were then shipped to the importer in the erstwhile Soviet Union by the plaintiff in accordance with the defendants shipping instructions. The defendant subsequently represented, to the plaintiff, that he be given a credit of DM (Deutsche Mark) 84,500, as there was a discrepancy in the price stated in the purchase order and the invoice; the plaintiff accordingly provided a credit of DM 84,500 and consequently, a sum of DM 507,000 became due to the plaintiff from the defendant. After this, the defendant, by its next contract with the importer dated 11.04.1986 (second contract), for Rs.4,560,000, agreed to supply some goods of the plaintiff, which in turn were procured by way of purchase orders dated 24.4.1986 at DM 1,064,000.The plaintiff issued an invoice to the defendant dated 13.8.1986 (the second invoice),accepting these purchase orders, and effecting a written contract. Consequently, a sum of DM 1,064,000 was owed to the plaintiff by the defendant.

4. The plaintiff shipped all the goods to the importer in accordance with the defendants shipping instructions. The suit alleges that the importer paid into the defendants bank account, the full invoice amount of Rs.7,095,000 (Rs.2,535,000 and Rs.4,560,000 for orders dated 27.12.1985 and 11.4.1986 respectively). The defendant had initially agreed to pay the amount due to the plaintiff, in Deutsche Marks, but subsequently in US Dollars. Therefore, while the amount owed was 1,571,000 DM, the defendant had undertaken to pay US $1,000,000 to the plaintiff. The defendant had admitted his liability to pay the amount to the plaintiff in his letter dated 10.12.1987 (at page 36), stating that he would pay it in three monthly instalments, the first of which was due in January 1988, and the last of which was to be paid by 15.3.1988. Later, on 13.1.1988 the defendant adopted the position that the entire amount would be made good in a single instalment. On 15.2.1988, he sent a message to the plaintiff from Singapore requesting its representative to meet him at Frankfurt airport on 17.2.1988 to enable the defendant to pay them by way of a cheque. On that date, a cheque dated 31.3.1988 and drawn on the Indian Bank, Singapore, and payable only subject to availability of funds, was given to the plaintiff, with the accompanying assurance that there would be adequate funds available. When presented for clearance, it was returned as the drawers seal was lacking. The plaintiff in any event, avers that it is entitled to sue the defendant as the cheque is a bill of exchange that was dishonoured by the drawee bank.

5. A legal notice was sent by the plaintiff to the defendant on 17.8.1988 demanding US $ 1,000,000, to which no reply was received from the defendant. Consequently, the plaintiff filed a summary suit under Order XXXVII, Rule 1, Code of Civil Procedure (variously "CPC" or "the Code") for the sum of US $ 1,000,000, along with the interest of 18% per annum (amounting to Rs.5,875,620). The suit was based on two written contracts as well as on the cheque of 31.3.1988, which would be a bill of exchange falling within Order XXXVII Rule 2(a). All the purchase orders and related invoices were taken together and alleged to constitute a written contract within the meaning of Order XXXVII, Rule 2(b)(i). The defendant had also admitted its liability by its letter of 10.12.1987, in writing, and consequently, the plaintiff sought to avail the summary procedure under this order.

Application for leave to defend

6. The defendant filed an application seeking unconditional leave to defend under Order XXXVII Rule 3(5) stating first, that the cause of action did not arise in India as the supply of goods was in West Germany, the delivery in Moscow and payment was made by the Russian importer to the defendants account in Moscow. The buyer and seller both operated their business outside the jurisdiction of this Court. The defendant claimed he did not operate his business in India, that he was, in fact, a Non-Resident Indian, and denied that the purchase orders were issued from his Delhi office.

7. As regards the alleged debt owed to the plaintiff, the defendant claims to have acted as the plaintiffs sole agent and representative in the Russian market, for sale of its goods since 1983-84. As the Russian buyers did not have the requisite number of Deutsche Marks to transact with the plaintiff, (in the present transaction) they requested that the sale consideration for the purchased goods be accepted in Indian Rupees. The defendant accepted this request. Further, it was agreed that the defendant would, with the Indian Rupees, purchase Russian air-conditioners and refrigerators for sale to German buyers through the plaintiff company, to enable it to receive its due, in Deutsche Marks, from the buyers. It was alleged that this arrangement was accepted by the plaintiff. The defendant claims to have visited potential buyers and fixed the price for sale of the goods. Anti-dumping duties were however imposed on goods from the USSR, thus rendering the arrangement unworkable. In the bargain, the money in Indian Rupees lay in the account of the defendant in Moscow, rendering their conversion into Deutsche Marks (and their conveyance to the plaintiff) legally unfeasible. Finally, the defendant suggested that the plaintiff establish a joint venture company in India to manufacture its products, in which the defendant would invest. This proposal however, too could not be fulfilled on account of some restrictions. Finally, the defendant claims to have arranged for the sale of a license on which the commission payable to it amounted to about US $ 1,000,000, i.e. the debt owed to the plaintiff by it. However, the plaintiff failed to meet the Russian demand on time, and consequently, the contract was awarded to the Japanese. Thus, the plaintiff was responsible for its own negligent attitude towards setting off the commission against the amount owed to it. For this submission, reliance was placed on Santosh Kumar v. Bhai Mool Singh, AIR 1958 SC 321 [LQ/SC/1958/3] , and Mechalec Engineers and Manufacturers v. Basic Equipment Corporation, AIR 1977 SC 577 [LQ/SC/1976/414] .

8. Lastly, it was submitted that the facts as narrated by the defendant make it clear that the suit was not maintainable against him, since the transactions referenced in the suit are all not in writing.

Plaintiffs reply

9. The plaintiffs position was that the defendants leave to defend application was time barred as it was filed after the expiration of the prescribed 10 day period from the date of service of summons for judgment, (required by Order XXXVII, Rule 3(5)). Summons were served on 23.10.1989 at the address of the defendant provided in his memo of appearance. The leave to defend application ought to have been filed on or before 2.11.1989. The defendant was however late by a day. It was stated in any event, that the leave to defend application was a categorical admission of the debt owed to the plaintiff, by the defendant, in that the latters plea was that the sale arrangement by the plaintiff- to the Russian government was entered into so as to set off the commission owed by the plaintiff to the defendant, against the debt. Additionally, the dishonour of the cheque issued by the defendant on the Indian Bank, Singapore, was not even denied by him. That alone, it was argued, was adequate ground for a decree in favour of the plaintiff.

10. As for the cause of action, the plaintiff alleged that it arose in Delhi as the purchase order dated 23.1.986 as well as the letter dated 10.12.1987 admitting the debt, were both written from New Delhi, pursuant to discussions held in this city. That the defendant had a place of business and carried on business for gains in India was clear from his letterhead, which bears a Delhi office address, as well as in Bombay, contrary to the assertion in the application. Telephone directory records, as well his affidavit, accompanying the application seeking leave to defend, and the appearance entered in Court also reinforced this. In any event, that the defendant may be an NRI is irrelevant for the purpose of jurisdiction under Section 20 of the Code.

Order of the Single Judge

11. The learned Single Judge, by judgment of 15.10.1993 held that this Court had jurisdiction over the defendant, since Section 20 clearly contemplated a civil courts jurisdiction over the territory in which the defendant, voluntarily resides or carries on business. Next, it was held that the defendant had admitted his debt to the plaintiff, in his application seeking leave to defend (under Order XXXVII, Rule 3(5), by stating that the plaintiff had failed to meet the demand of the Russian Government, in the sale arranged by the defendant as supplier, by which the commission owed to the defendant could have been set off against the amount owed by the defendant to the plaintiff. The judgment notes that the defendant sought to argue that the plaintiff could not meet the Russian demand in time, owing to which the contract was given to another party, and that this lost commission was sought to be made the basis of the leave to defend the suit, in the form of a counter claim. The Court noted that this was a tenuous basis on which to seek leave to defend, given that Order XXXVII makes no allowance for such counter claim, especially in the face of a categorical admission as to the existence of the debt owed to the plaintiff. Placing reliance on Bramec Suri P. Ltd. v. Suri Smith Chem. 1981 RLR 60 [LQ/DelHC/1980/409] , in which it was held that leave to defend may only be sought by advancing a defence to the course of dealing giving rise to the specific cause of action raised in the plaint, the Court denied the defendant the leave to defend, since an alternate cause of action or controversy cannot be invoked by the defendant, to enlarge the scope of the cause of action in the plaint for summary suit. The decree passed comprised a recovery of Rs.1,51,50,000, equivalent to US $1,000,000, along with interest of Rs.58,75,620/- and pendente lite and future interest at the rate of 18%, from the date of suit till the realisation, as well as costs in favour of the plaintiff. The plaintiff was also found to be entitled to the difference in exchange rate between the date of institution of the suit and the date of decree. It is this judgment and decree that is sought to be challenged in this appeal.

Appeal proceedings

12. This appeal was admitted on 23.2.1994. The unsuccessful defendant argues that the agreement to make payment in US Dollars arose in an oral arrangement and not in written purchase orders or contracts, and therefore Order XXXVII was inapplicable. Next, it is argued that the Single Judge had erred by disregarding the fact that the purchase orders were not entered into or executed in India and that the goods moved from Germany to the USSR, consequently denying this Court of territorial jurisdiction over the dispute. It was sought to be argued that in view of Order VII Rule 1, CPC, particulars detailing the cause of action comprise a different category from particulars detailing the courts jurisdiction. In this context, it was argued that reliance on Section 20 of the CPC for the question of jurisdiction was misguided, for a Court cannot rely on the facts showing jurisdiction. Next, responding to the plaintiffs claim that it could sue the defendant for dishonour of the cheque by the drawee bank, it was argued that there was nothing to show that the bill of exchange was protested for dishonour as required by Section 104 of the Negotiable Instruments Act. In any event, it was stated that summary suits (under Order XXXVII CPC) can only arise from bills of exchange drawn and negotiated in India and not on cheques drawn in US currency outside India, presented in Germany and made payable on a bank in Singapore. The appellant also argued that the Single Judge erred in pronouncing on this issue as it was violating Section 9 of the (erstwhile) Foreign Exchange Regulation Act (FERA). Along with the appeal, an application under Order XLI, Rule 5, read with Section 151 of CPC was filed, seeking stay on the execution of the decree, failing which he claimed he would suffer irreparable injury.

13. The plaintiff argued that the appellant had also sought a stay of execution of the decree (CM no 377/1994), but then had withdrawn the application. It is contended that this withdrawal was with the view to prevent the Court from ordering the appellant to deposit the decretal amount in Court. Consequently, the plaintiff had applied for execution seeking attachment of the properties of the defendant, including his bank accounts, and seeking, in the alternative, a warrant for arrest and detention in civil prison. By order of 17.3.1994, execution was ordered, but subsequently in the same day, in the absence of the Decree Holder/respondents counsel, and on hearing only the Judgment Debtor/appellant, the attachment order was recalled and the execution application was listed for hearing again on the following day. This, it is alleged, was sufficient time for the appellant to withdraw money from and empty his bank accounts. By the order of 18.3.1994, the executing court attached properties of the Judgment Debtor once again.

14. The next argument of the plaintiff was a reiteration of its submission that the appellant/defendant had admitted to his debt and therefore, was effectively pocketing the price of goods sold by it (the plaintiff) to the Russian buyers, instead of conveying the payment to them as the sellers. Finally, the plaintiff stated that the appellant/defendant was involved in a similar summary suit by the cause title B B Patel v. Nexim Exports Pvt. Ltd. (Suit no. 2889/89), in which the latter had admitted the debt due from him, and by order of 3.5.1993, the Court had granted leave to defend, subject to the condition that a bank guarantee for half the amount owed, was deposited in Court and the other half, in a fixed deposit, whose receipts were to be produced to the Registrar of the Court. In this light, it was argued that the respondent was worse off despite having a decree in its favour; in the interests of justice, a deposit of the decretal amount was sought of the appellant.

Other miscellaneous and interlocutory proceedings

15. The plaintiff also filed an application on 21.8.1996 under Order XLI, Rule 1 CPC, (CMP 1240/1996), - relying on Order XLI Rule 1 (3), to insist that an appeal against a money-decree, mandates a pre-deposit of the disputed amount, or furnishing of adequate security thereof. This Court notes that the order of 23.2.1994, disposing of the initial application filed by the defendant/appellant for stay of the execution (CM no. 377/1994), recorded that the respondent had sought compliance with Order XLI, Rule 1(3) even on the first day of hearing. The plaintiff was aggrieved by the fact that first, the appellant had offered to create a second charge upon the NRE FD of Rs.12.5 crores, held in the Indian Bank, Madras towards security of the decreetal amount, where the first charge was already in the hands of the Indian Bank, for a liability to the tune of Rs.26 crores, second, that the appellant was running other businesses in India by the name Nexim Exports P Ltd./ Nexim Hotel Ltd/ Gambro Nexim (India) Medical Ltd. etc., whose assets were not disclosed by him in the affidavit, and whose existence proved that he did, in fact, have business interest in India, and third, that the appellant, being an NRI, would obviously have assets abroad, which he could tap in to in order to pay the decretal sum. Consequently, the plaintiff urged that Order XLI, Rule 1(3), being mandatory, be enforced against the defendant, failing which the appeal is not maintainable. The defendants answer is that Order XLI, Rule 1(3) is not mandatory. It further says that the Court can exercise its discretion in its favour, and hear the appeal without ordering a deposit or a security. In any event, the defendant/appellant argued that the Single Judge had wrongly assumed that he carried on business for gain in Delhi, as his Lajpat Nagar business does not bind him, as an NRI, down to the territorial jurisdiction of Delhi, as that business was run by as a distinct business legal entity, which was unrelated to the transaction in question.

16. On this basis, it was argued that the issue fell outside the territorial jurisdiction of Indian Courts. By order of 21.11.1996, the Court noted that it prima facie had jurisdiction over the matter, and also that an application for stay of execution had been filed; the Court thus directed that the appellant furnish security to the satisfaction of the Registrar, in order to preclude execution of decree, which the appellant did not to comply with, as recorded in the order of 20.12.1996.

17. The antecedents of the execution proceedings were that the order dated 18.3.1994, admitting the Execution Petition No. 58/94, directed attachment of the bank accounts and assets of the Judgment Debtor, through warrants of attachment dated 5.5.1994. Notice of the petition was also directed to be issued, as regards the petitioners claim of detention of the Judgment Debtor in civil prison, for the same date. An application was filed in these execution proceedings (E.A. No. 70/94), asking for the last paragraph of the judgment to be treated as decree for the purposes of execution, under Order XX, Rule 6A, which too was allowed. Execution was ordered by the Court on 24.5.1994, while dismissing the objection of the Judgment Debtor that first, the decree holder had not paid court fee over the second part of the decree (the second part of the last para of the judgment in the suit) i.e. the difference between the rate of exchange prevalent at the date of filing of the suit and the date of decree, which was the reason for the Registrys objection on 6.3.1994 and 16.3.1994 to drawing up a decree, second, the affidavit filed with the Order XX, Rule 6A application was false, and finally, that Order XX, Rule 6A could only apply if court feels had been paid fully. The Court found that the decree holder had made good this additional amount on 26.3.1994, and could not have done so earlier, as the Registry had not communicated the amount to it. Hence no infirmity was found in the order of 18.3.1994. It was also recorded that on 24.3.1994, on which date the decree holder was to furnish the particulars of the bank accounts and immovable properties, the decree holder was only able to state that the Judgment Debtor had an account in the Indian Bank, South Extension II branch, but was unable to submit account details; instead, an application under Section 6 of the Bankers Books Evidence Act, 1891 was moved, seeking that the bank be directed to produce copies of the entries in their records, pertaining to the accounts/FD receipts of the Judgment Debtor from May 1989 till date, which was allowed. A fresh notice was issued to the Golf Links branch of the bank as well.

18. Subsequently, by an order of 05.02.1996, the Judgment Debtor was directed to disclose his assets as well as the assets in the names of his spouse and children, with which he complied on 15.2.1996. The respondent/decreeholder however contested this affidavit in its affidavit dated 26.2.1996, stating that the defendant/appellant had indulged in concealment of the existence of a residential house, an office space, and a car, as well as of his assets abroad, where he claims to be resident. The plaintiff also averred that he had suppressed information regarding the encumbrances on his assets. Consequently, it was argued that the Judgment Debtor was attempting to reduce the decree to a paper decree.

19. The Execution Petition No. 58/1994 however was dismissed in default and subsequently restored twice (once on 13.1.1999, restored on 16.10.2003, and once again on 7.8.2007, and restored on 25.1.2008). That order allowing restoration, on review, was recalled on 28.7.2009 by the Learned Single Judge, relying on Damodaran Pillai v. South Indian Bank Ltd. (2005) 7 SCC 300 [LQ/SC/2005/906] , which had held that the execution application, when dismissed in default, cannot be restored after a period of 30 days, keeping in mind that delay cannot be condoned under Section 5 of the Limitation Act for execution proceedings. On appeal from the review (EFA no. 32/2009), the Division Bench, on 30.11.2010, remanded the matter back to the Single Judge, on the finding that Rule 106 of Order XXI had been incorrectly applied. It was ordered that the invocation of Section 151 for restoration be reconsidered, on the ground that while the mere captioning of an application as under Section 151 cannot dissuade the Court from applying the appropriate legal provision, there is no bar on resorting to Section 151 when no provision of law can be located for alleviating a grievance. However, the Order XXII, Rule 10 application, which was filed by Invensys Deutschland Gmbh, who sought substitution of the decree holder in the proceedings, was directed to be disposed of first.

20. On remand, the order of 4.7.2012 was made, allowing the Order XXII, Rule 10 application (E.A. no. 356/2006) seeking substitution of the decree holder with Invensys Deutschland Gmbh, on the ground that there was neither any ground to doubt the validity of the notarized merger documents, nor any objection raised by the decree holder to the claim for substitution. Moreover, Section 146 of the Code of Civil Procedure provides that a proceeding taken by or against a person can be continued by or against any person claiming under the original party. On the other points of law, the order held first, that according to Union Bank of India v. Naresh Kumar & Ors., 1996 (6) SCC 660 [LQ/SC/1996/1514 ;] ">1996 (6) SCC 660 [LQ/SC/1996/1514 ;] [LQ/SC/1996/1514 ;] , technical objections cannot be used to dismiss suits, second, Damodaran Pillai (supra) which was relied upon by the Learned Single Judge in recalling the restoration order, would only apply after the Execution Petition has been listed for hearing, whereas when the Ex P. 58/1994 was dismissed in default on 7.8.2007, it had not been listed for hearing, but merely adjourned to that date on the counsels statement that the petition was going to be withdrawn, third, that Section 151 of the Code of Civil Procedure was a wide enough inherent power in the hands of the Court to allow restoration of an Execution Petition dismissed in default and finally, that the arguments on the power of attorney were irrelevant as Invensys Deutschland Gmbh had already been permitted to substitute the decree holder in the same order which disposed of the application (E.A. no. 356/2006). The Ex P. 58/1994 was thus restored and the counsel was required to take steps to attach the properties of the Judgment Debtor.

21. In the meantime, the application for substitution under Order XXII, Rule 10 application (CM No. 4118/2009), came up for hearing before a Division Bench of this Court on 24.7.2012, but was listed for adjudication before the competent Registrar, per the rules of the Court for Order XXII, Rule 10 applications. It was disposed of on 21.1.2013 by the Registrar (Appellate), without recording any findings, on the ground that the order of the Learned Single Judge dated 4.7.2012 had already allowed the substitution of the original decree holder (in E.A. no. 356/2006 in Ex. P. 58/1994), which order had not been stayed. Subsequently, CM 4553/2013 was filed (8.2.2013) by the appellant, seeking setting aside of this order of the Registrar (Appeals), on several grounds.

22. The order of 4.7.2012 was subsequently appealed in EFA(OS) 36/2012, alongside another application moved for the stay of execution (CM No. 11070/2013), where it was sought to be argued first, that the application for substitution should have been heard only after the application for restoration, second, that the restoration application as well as the substitution application (which had not been filed for more than six years) were barred by limitation, and that Section 151 was wrongly invoked, and third, that the document of merger was not notarized, that the merger itself was not in consonance with German law, where the decree holder company is situated, and that a single person had been transferred the power of attorney by all three entities i.e. the original decree holder, the party seeking substitution, and its parent company Invensys European Holdings. The appeal was dismissed by a judgment of 24.9.2013 by a Division Bench, noting that no objections to this merger document had been filed by the original decree holder, and that the decree holder and the party seeking substitution were indistinguishable, as all the shares in the former had been acquired by the latter, thus making it the sole shareholder, as evident by the notarized and registered merger documents. The challenge to the invocation of Section 151 was found to have already been answered in the view taken by the Division Bench that ordered the remand, and thus could not once again be raised in appeal from the Single Judges order. In any event, the invocation of Order XXI, Rule 106 (as regards the 30 day limitation), as well as Order 9, Rule 4 were found to be incorrect as these were merely technical objections advanced to defeat substantive justice. Finally, it was held that the Single Judge could not possibly have heard the restoration application after the substitution application, on account of a direction to the contrary by the Division Bench that ordered remand. No stay of execution was granted either.

23. Thus, this Court finds that the order of 24.9.2013 has rendered final findings on the question of substitution of the decree holder with Invensys Deutschland Gmbh, allowing the same. Therefore, CM 4553/2013 does not survive for consideration, as the order of 4.7.2012, which was the basis of the order of the Registrar (Appeals), was confirmed by the order of 24.9.2013, by the Division Bench, thus rendering any objections to the order of the Registrar (Appeals) infructuous. This Court will thus not record any conclusions on the challenge to the substitution, although written submissions were tendered by the appellant in this regard. As regards the other proceedings, the execution petition has been restored, no stay has been granted on the execution, and the decree holder has been directed to take steps to attach properties of the Judgment Debtor.

Arguments of the counsels

24. The appellant argued that the suit filed was not maintainable under Order XXXVII as there were no written contracts entered into between Nexim, India and the respondent/plaintiff. It was argued that Nexim Moscow was a mere commission agent of the respondent operating solely out of the USSR, in transactions with Russian buyers like Technointorg, Russia. Nexim Moscow therefore was a distinct legal entity from Nexim India, the appellant/defendant, and both the first and second invoices, raised by the former entity could not be used to prove written contracts with the latter entity by the respondent/plaintiff, since the former entity was not impleaded before this Court. On this count, it was argued that this Court lacks jurisdiction to hear the dispute, by the principle of forum non conveniens, on the ground that all the transactions and parties involved were located abroad. It is submitted that while the respondent knew that Nexim operated out of Moscow, it had suppressed this fact in the plaint, in order to falsely bring the dispute within the Courts jurisdiction. The appellant submits that the plaintiffs assertion in the suit, that it was unaware of the legal status of Nexim, an entity that was its own marketing agent in Russia, had to be false, as no principal can be unaware of its own agent. Both the invoices (4.3.1986 and 13.8.1986) were issued by the respondent in favour of Nexim, Moscow, at its Moscow address. These invoices also indicate that the beneficiaries under the invoices were Technointorg, Russia, which is, it is argued, a necessary and proper party to the dispute. Thus, these invoices clearly indicate that no part of this transaction took place within India, to merit the invocation of this Courts jurisdiction. Consequently, it is argued that no cause of action has arisen for this Courts consideration.

25. Next, it was sought to be argued that the suit was not based on a liquidated amount of money since the purchase orders were contradictory to the invoice as well as the figure claimed in the suit. Even assuming that the amount reflected in the invoices was treated as the liquidated amount on which the suit is based, as urged by the respondent/plaintiff, the appellant argues that the credit of DM 84,500 that was allegedly allowed to it by the respondent/plaintiff was not proved, and there was no amended invoice to show for the newly due amount of DM 507,000. It is argued that contrary to the plaint, the first invoice indicates that an amount of DM 591,500 was due. The amount owed would then be DM 591,500 + 1,064,000 = DM 1,655,500, which is totally different from the claimed amount of DM 1,571,000, the latter amount being unsupported by documents or credit notes. Hence, a decision on the correct amount of money owed would require a full trial.

26. It is submitted that a letter of 10.12.1987 is sought to be relied upon by the respondents, for the amount of USD 1 million, even though there is no reference to the subject matter of this suit, or the contracts or the invoice, in any manner in it. The letter references a discussion in New Delhi on 10.12.1987, which, the appellant submits had nothing to do with the subject matter of this suit, and was with regard to another unrelated transaction. It is argued that the discussion and the instant suit relate to two different transactions in different currencies, and that this question too, would require a full trial for correct decision.The letter of 13.01.1988 was also argued to be unconnected to the transaction of the instant suit.

27. Next it was argued that the cheque is unrelated to the alleged contract or the legal entity Nexim, Delhi or the subject matter of the suit, and that the Negotiable Instruments Act, lacking extra territorial application, would not apply to a cheque which was neither issued/delivered in India, nor dishonoured in India. The respondent, it is argued, had admitted in its pleadings that the appellants cheque was presented for encashment in Singapore, and that despite its being returned for the absence of the drawers seal, no notice was given by the respondent to the drawer for the same.

28. Assuming but not conceding that there exists a written contract, it is sought to be argued that the contracts are contrary to Indian law, specifically Section 9 of the Foreign Exchange Regulation Act (FERA) now, Section 3 of the Foreign Exchange Management Act (FEMA) and the Negotiable Instruments Act, as well as public policy. It is argued that the two Russian contracts (dated 27.12.1985 and 11.04.1986, valued at Rs.25,35,000 and Rs.45,60,000 respectively) amount to Merchanting Trade, which is the buying of goods in freely convertible foreign currency from a country of External Group, and selling the same in Indian currency, without entering into Indian territory, which is prohibited by the RBI Exchange Control Manual, in Chapter 13, and Section 9 of the FERA. It is argued that the seller is a German entity (from an External Group country), and the buyer is a Russian entity (from a Bilateral Group country), paying Indian Rupees for goods that were delivered from Germany to Russia without ever reaching Indian shores, the transaction constitutes merchant trading. It is further argued that the two alleged purchase orders (dated 23.01.1986 and 24.04.1986) are merely written messages which were required for issuance of gate pass at the factory of the plaintiff/respondent, and not for delivery to the defendant/appellant. Assuming but not admitting that there is a valid contract, the contract should be hit by Section 23 of the Indian Contract Act, as it was formed outside the territory of India.

29. As for the purchase orders being issued by the defendant in Delhi, it is argued that Nexim (Moscow) and not the appellant placed orders, for Technointorg, the Russian importer and beneficiary of the order. The attempt at invoking jurisdiction of Delhi courts is rooted in the fax message originating in a Delhi hotel, where the appellant/defendant was residing during a temporary visit to India.

30. The Plaintiffs submissions are that a suit under Order XXXVII proceeding admittedly requires written contracts; in the facts of this case, they are:

a. The two invoices dated 4.3.1986 and 13.8.1986, along with the two purchase orders dated 23.01.1986 and 24.04.1986

b. The appellants letter dated 10.12.1987 agreeing to pay the amount owed in three instalments in US Dollars, and the respondents letter dated 13.01.1988 accepting the appellants offer to pay in US Dollars in three instalments

c. The fax dated 15.2.1988 stating that the cheque of USD 1 million would be handed over to a representative of the respondent at the Frankfurt airport

d. The cheques dated 31.3.1988 and 17.8.1988 for USD 1 million

31. That the plaint was based on a liquidated amount of money was made clear in the prayer of the plaint. The appellant/defendant neither denied the invoices nor letters, nor denied that he acted upon the agreement between them by issuing a cheque for US$ 1 million to the plaintiff/respondent. As for the arguments on territorial jurisdiction, it is submitted that the appellant was served notice at his Delhi address. The same address is also provided in his affidavit. These facts confirm that the appellants place of business is in Delhi, and that the assumption of territorial jurisdiction of this Court under Section 20 of the Code of Civil Procedure is not unlawful.

32. In any event, the appellant had accepted his liability to pay by way of issuing the cheque of USD 1 million. Further, he neither denied his role in ordering the goods from the respondent, nor in accepting payment from the buyer. Moreover, in his application for leave to defend, he specifically admitted that USD 1 million was owed by him to the respondent decree holder. Placing reliance upon R Kumar and Co. v. Chemicals Unlimited, AIR 2001 Bom 116 [LQ/BomHC/2000/1070] , it is argued that a categorical admission of liability can be the stand-alone basis for decreeing a summary suit against the defendant. As for the counter-claim sought to be set up by the appellant, placing reliance on Punjab and Sind Bank v. B S K Tulshan, ILR (1991) 1 [LQ/KerHC/1990/503] Delhi 293 and Bramec Suri P. Ltd. v. Suri Smith Chem., 1981 Raj. L. R. 60, it is argued that Order XXXVII suits do not contemplate the entertainment of counterclaims, as leave to defend is only granted so as to hear a plausible defense with regard to the course of dealings alleged in the plaint, and not alternate courses of dealings and extraneous controversies. Finally, reliance was placed on Forasol v. ONGC, AIR 1984 SC 241 [LQ/SC/1983/309] , to argue that a decree must be ordered to be paid, alternatively, to a sum in Indian Rupees, equivalent to that in foreign currency, keeping in mind the eventuality that requisite permissions cannot be obtained from the concerned foreign exchange authority, or that the defendant does not make good the decretal sum in foreign currency.

Analysis and Conclusions:

33. The principal issue that arises for decision is whether the Single Judge was correct in decreeing the summary suit filed by the respondent/plaintiff, without granting the defendant the unconditional leave to defend. Rule 3(5) of Order XXXVII lays down the conditions precedent to the grant of leave to defend:

(5) The defendant may, at any time within ten days from the service of such summons for judgment, by affidavit or otherwise disclosing such facts as may be deemed sufficient to entitle him to defend, apply on such summons for leave to defend such suit, and leave to defend may be granted to him unconditionally or upon such terms as may appear to the Court or Judge to be just:

Provided that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed by the defendant do not indicate that he has a substantial defence to raise or that the defence intended to be put up by the defendant is frivolous or vexatious:

Provided further that, where a part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit shall not be granted unless the amount so admitted to be due is deposited by the defendant in Court.

34. On the point of what constitutes a frivolous or vexatious defence as opposed to a substantial defence, Mechalec Engineers & Manufacturers v. Basic Equipment Corporation, AIR 1977 SC 577 [LQ/SC/1976/414] , citing Kiranmoyee Dassi v. Dr. J. Chatterjee (1945) 49 CWN 249 is relevant; the Supreme Court held as follows:

(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 defence 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, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiffs 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.

35. On the meaning of triable issue, the view of the Supreme Court in Raj Duggal v. Ramesh Kumar Bansal, 1991 Supp (1) SCC 191 is relevant:

The test is to see whether the defence raises a real issue and not a sham one, in the sense that if the facts alleged by the defendant are established there would be a good or even a plausible defence on those facts. If the court is satisfied about that leave must be given. If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a document on which the claim is based or uncertainty as to the amount actually due or where the alleged facts are of such a nature as to entitle the defendant to interrogate the plaintiff or to cross-examine his witnesses leave should not be denied. Where also, the defendant shows that even on a fair probability he was a bona fide defence, he ought to have leave. Summary judgments under Order 37 should not be granted where serious conflict as to matter of fact or where any difficulty on issues as to law arises. The court should not reject the defence of the defendant merely because of its inherent implausibility or its inconsistency.

[emphasis added]

36. The governing principle to decide whether a triable issue exists in summary suit: on the basis of the defendants plea, is whether first, there is a fair dispute as to the meaning of the document forming the basis of the claim, second, there is uncertainty as to the amount actually due, or finally, where the facts are of such nature that the defendant should be allowed the right to cross-examine witnesses or interrogate the plaintiff. On a fair application of these principles, this Court finds that no triable issue arises, since the defendant neither questions the meaning of the purchase orders sought to be made the basis of the plaintiffs prayer, nor challenges the amount that is prayed for. He merely seeks first, to disclaim the connection between the letter dated 10.12.1987 (acknowledging the debt of US $ 1 million in three instalments), and the purchase orders in question, and second, to argue that the letter of 10.12.1987 was not a written contract.

37. So far as the appellants attempt to de-link the letter of 10.12.1987 (acknowledging the debt) from the transaction goes, this fact ought to have been stated in the application for leave to defend and cannot now be taken in consideration, having been raised for the first time, in the memorandum of appeal. In any event, that the amount of US $ 1 million was owed to the plaintiff in connection with the purchase orders in this case was admitted by the defendant in the application seeking leave to defend:

5. It is submitted that the defendant had been representing the plaintiff in the Russian Market since 1983-84 as their sole representative for sale of Ranco products and has sold goods worth million of deutschemarks to Russia. In the present transaction the Russians did not have enough hard currency and therefore requested Ranco products to be sold in India rupees.

Since the defendant has been doing business in USSR and with a view to maintain good-will and better future relations, the defendant agreed to this proposal. It was further agreed that with the India rupees, the defendant would purchase Russian airconditioners and refrigerators for sale to German buyers through Ranco i.e. the Plaintiff herein. This would have enabled the plaintiff to have the requisite amount in Deutschemarks. The said arrangement was duly accepted by the plaintiff. It is submitted that it was on the basis of the aforesaid arrangement/agreement between Ranco and their agent i.e. the defendant hereinabove that the contract was entered into between the parties.

In furtherance to this arrangement, the defendant visited potential buyers and fixed the price for sale of the aforesaid goods to them. However, at that time the EEC imposed antidumping duty on USSR goods and thereby made the above arrangement unworkable. Meanwhile, the money was lying in India Rupees in Moscow with no way to convert the same to Deutschemarks legally. To try and find a way out for effectively and legally remitting the money to Ranco Germany, the defendant suggested that Ranco should start a joint venture company in India for manufacture of Ranco products in which the defendant would also invest the money. Though this proposal was considered by Ranco USA and several meetings also took place in India, this project could not be made workable due to various restrictions imposed.

Thereafter the defendant further organised a sale of one licence to this Russian Govt. on which the commission to the defendant from Ranco would have approximately been US $ one million.

However, though various meetings and discussions took place, Ranco i.e. the plaintiff failed to comply with the Russian demand on time and the contract went to the Japanese. Thus, it was due to the negligence and casual attitude of the plaintiffs that the commissions of the defendant could not be set off against the amount due to the plaintiff.

[emphasis added]

38. The defendant in stating the background circumstances that gave rise to the supply agreements to Russian importers, admits the existence of the contracts in question. That the money was received from the Russian importers in Indian Rupees by the defendant is also admitted. Furthermore, it is also admitted that the defendant sought to find a way to legally remit this amount to the plaintiff, and finally sought to set off commissions that would be payable to the defendant from Ranco, for arranging a sale of a license to the Russian government by Ranco. Having made a clear and categorical admission that the amountof US $ 1,000,000 was owed to the plaintiff in connection with the sale to Russian importers, reflected in the purchase orders in this case, it is not open to the defendant to now argue that there was no liquidated amount sought in the suit prayer, or that the amount of USD 1 million was unrelated to the purchase orders.

39. The defendants submission that the letter of 10.12.1987 is not a written contract and that in the absence of a written contract, a summary suit is not maintainable, calls for consideration. It is settled in the decisions of this court (Corporate Voice (P) Ltd. v. Uniroll Leather India Ltd., 60 (1995) DLT 321 [LQ/DelHC/1995/516] ) that a suit based on an agreement through exchange of letters is maintainable under Order XXXVII. In another decision, M/s. Dura - Line India Pvt. Ltd. Vs. BPL Broadband Network Pvt. Ltd. (AIR 2004 Del 186 [LQ/DelHC/2003/1468] ) the Court held as follows:

"8....The said submission is misconceived. The suit is based on a written contract comprising the offer, its acceptance by issuance of purchase orders and raising of invoices in execution thereof.

These constitute the written contract. The amounts claimed are those due in the suit under the above written contract.

Additionally, reliance has been placed on the acknowledgement and confirmation of balance issued by the defendant. The mere averment in the plaintiff that the plaintiff also maintains a running account, reflecting the price of the goods supplied and the payments made therefore, does not change the nature of the suit as in one being based on a running account. The mere maintenance of a running account does not disentitle the plaintiff from filing the suit under Order XXXVII, CPC, based on a written contract and acknowledgement in writing."

40. The letter dated 10.12.1987, as discussed previously, is an acknowledgement of the debt of US $ 1,000,000 owed to the plaintiff, by the defendant. Daya Chand v. Santosh Devi Sharma, 67 (1997) DLT 13 [LQ/DelHC/1997/250] was a decision of this Court on the question of whether a suit under Order XXXVII, could be filed on the basis of an "acknowledgement".

The Court observed:

It appears to me that suit on the basis of written acknowledgement of a pre-existing debt being a written contract could form a basis for recovery of an existing debt based on the said written contract in the shape of written acknowledgement. In view of the observations in Food Corporation of India v. BalKishan Garg, (supra) the amount of the debt had been ascertained between the parties and the interest is also readily calculable amount in view of the past conduct of the parties. The acknowledgement was of a pre-existing debt. The purpose of giving this written acknowledgement implies in it an absolute unqualified present liability with an obligation to repay it in future on the understanding that the creditor need not file a suit immediately. Consequently, the written acknowledgement surely falls under the term "written contract" and the parties had consensus of mind when this written acknowledgement was signed by one of the partners of the petitioner firm. There was a promise. There was consideration. There was acceptance. All the elements essential for the formation of a written contract were present. Nothing more is required in this acknowledgement to make it a written contract. Accordingly, I am of the definite opinion that the present suit has been filed on the basis of a "written contract" for the recovery of the existing debt on the basis of this "account stated" and case on the basis of said written contract in the shape of written acknowledgement is certainly maintainable under Order XXXVII, CPC.

The same view was earlier expressed in Sushila Mehta v. Bansi Lal Arora (1982) ILR 1 Delhi 320, [LQ/DelHC/1981/417] in the following terms:

10. The question is whether the receipt dated 26th August, 1978 is a "written contract" or not. In my opinion it clearly is. The plaintiff paid the application money for allotment of shares. The defendants accepted it, though it is true that defendant No. 2 came into existence a few months later. The payment of Rs. 1,00,000 by the plaintiff as application money and its acceptance by the defendants constitutes a contract. It may be labelled as a receipt but that does not mean that it is not a contract.

11. It was said that it has not been pleaded that the suit is based on a written contract. This is not required by any provision of law. The Court has to find out whether the suit has been brought upon a negotiable instrument or a written contract-or an enactment or a guarantee to which Order 37 Civil Procedure Code applies. The acknowledgement of Rs. 1,00,000 by the defendants for the purpose of allotment of shares as application money therefore clearly amounts to a contract. Because it is their own case that the plaintiff paid money for allotment of shares and they accepted it. There was "consensus of mind." And "consensus of mind" leads to a contract, as Lord Caizns said.

(Cundy V. Lindsay (1878) 3 App Case -459(2) at p. 465). There was promise. There was consideration. There was acceptance. All the elements essential for the formation of the contract are present. What more is needed to make a contract. It was not a nudum pactum.

The determining factor in such cases appears to be whether there was consensus ad idem between the parties as to the debt owed.

41. In this context, it would be apposite to extract the letters dated 10.12.1987 and 13.01.1988, and the message dated 15.02.1988, all of which have been placed on record by the plaintiff:

CONFIDENTIAL

Bombay Office: Arcadia, 132, Nariman Point, Bombay

Phone: 225764 Tlx: 11-5877 NEXM IN

NM/RNC/87/14

10.12.1987

Attn Mr. Henry Baker,

This is in reference to our discussions in New Delhi on 10.12.87.

I hereby confirm to pay to Deutsche Ranco GMBH in their West Germany account a total sum of One million US Dollars in three equal instalments payable on 16th day of every month beginning with the 1st instalment payment from January, 1988. Thus, the whole amount of 1 million US Dollars would be paid to the abovenamed account by the 16th of March, 1988.

May I take this opportunity to request you to consider the possibility of increasing my commission on Rancos products and license sales to USSR in future. This request is made here in view of the heavy losses incurred by me alone because of the currency fluctuations in the Ranco deals with USSR.

I hope to have a sympathetic attitude towards my company from the management of Ranco.

Thanking you,

Yours faithfully,

Sd/-

MOHAN MURTI

Delhi Office: 47, Ring Road, Lajpat Nagar-III, New Delhi

Phones: 6837485; 66331321 Telex:31 4295 NEXM

IN.

42. The letter dated 13.01.1988 reads as follows:

DEUTSCHE RANCO GMBH

AM NEUEN RHEINHAPEN 4 D 6720 SPEYER

BUNDESREPUBLIK DEUTSCHLAND

TELECOPY

To : Mr. Mohan Murti 13.1.88-mf

Renam Trading

Singapore 2251449

Re. our telcon of yesterday

According your instruction I have informed Mr. Baker that you have made arrangements for the transfer of the full amount.not in 3 equal installments as agreed with Mr. Baker in India.

We expect that this matter will be solved within next 10 days future according your advice.

Many thanks. We all look forward to a successful common future.

Best regards

RFA (OS) 5/1994 Page 32

Sd/-

H.H. Braune

Deutsche Ranco GmbH

43. The message dated 15.02.1988 reads as follows:

Monica,

Pls ask Mr. Braune to meet me at FRANKFURT airport (inside) on 17-2-88 at German fine 16.00 (am frm Copenhagen Flight SK 633) when Ill hand over the cheque to him. The date on cheque is 31.3.88 becaz of availability of funds in my account by this date is 100% compliant.

Okay, Thanks.

Pls. inform Mr. Henry Baker.

44. The letter of 10.12.1987 is a clear acknowledgement of the debt owed to the plaintiff by the appellant defendant. Likewise, the other letters, and the invoices too indicate a consensus between the parties as to the debt owed. All the purchase orders, contracts and invoices were appended with the plaint as annexures. They clearly state that they was entered into between Nexim New Delhi, India and the Russian importer, Technointorg, Moscow. The invoices state that supply was being arranged by Nexim, on behalf of Deutsche Ranco GHMB, pursuant to shipping order of Technointorg. The defendants name and signature are also in these invoices. Pertinently, the defendant did not deny the cheque, a copy of which was filed with the plaint, or any of the antecedent facts stated regarding the cheque in the plaint, in its application for leave to defend. In light of these facts and the clear admission by the defendant in the written statement as to the debt, the requirement of Rule 1(2)(b) of Order XXXVII that the liquidated amount payable must arise on a written contract, stands fulfilled.

45. Order XXXVII, Rule 7, states the procedure to be followed in summary suits, on matters not governed by Order XXXVII itself:

7. Procedure in Suits.- Save as provided by this order, the procedure in suits hereunder shall be the same as the procedure in suits instituted in the ordinary manner..

This being the rule, Order 12, Rule 6 must apply to even summary suits, if there is an admission on facts made in the pleadings. It reads:

6. Judgment on admissions.-

(1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the court may at any stage of the suit, either on the application of an party or of its own motion and without waiting for the determination of any other question between the parties, make such Order or give such judgment as it may think fit, having regard to such admissions.

(2) xxx xxx xxx

46. The admission under this provision must be clear and unambiguous (Ref. Uttam Singh Duggal & Co. v. United Bank of India & Ors 2000 (7) SCC 120 [LQ/SC/2000/1172] ; Jeevan Diesels & Electricals Ltd. v. Jasbir Singh Chadha, (2010) 6 SCC 601 [LQ/SC/2010/526] ). Jeevan Diesel & Electricals Limited (supra) rules that the Courts have to examine, while considering pleadings and considering if a decree on admission is to be drawn, whether there is a clear and unequivocal admission of the case (of the plaintiff, by the party defending the application). Also there is no golden rule about what constitutes clear and unequivocal admission. The Court has to proceed on a fact dependent approach having due regard to the overall effect of the pleadings and documents. In this case, since there was a clear admission of debt of US $ 1,000,000 in the defendants application for leave to defend, at the end of para 5, as excerpted above, the order of the Learned Single Judge cannot be termed erroneous.

47. As for the submissions of the appellant on this Court lacking territorial jurisdiction are concerned, Section 20(a) of CPC clearly applies in this case, since the defendant undertook to supply the goods to the Russian importer Technointorg, by the name Nexim-New Delhi, India, and thus evidently has a place of business in Delhi. Moreover, the defendant also voluntarily resided in Delhi, at the time of commencement of the suit, as evidenced by the address provided in the affidavits filed by him on the records of the Court, which reads 47, Ring Road, Lajpat Nagar, New Delhi. These submissions are consequently, meritless.

48. Finally, this Court notes that the defendant/appellants arguments on the alleged violations of the FEMA/FERA and the NI Act are as to merits of the case. These arguments are precluded in a summary suit where the leave to defend was denied, and therefore, cannot be heard before this Court at the appellate stage.

49. Before concluding, this Court notes that the position of law, after Forasol v. ONGC, AIR 1984 SC 241 [LQ/SC/1983/309] , is that the date of final disposal of the suit, i.e. the date of judgment and decree must be the date on which the exchange rate is fixed, for the purposes of conversion of the foreign currency decreetal sum to Indian Rupees. This Court is mindful that the plaintiff cannot claim an amount greater than that prayed for in the plaint, based on escalation in the exchange rate, as noted in United India Insurance Co. Ltd. v. Patricia Jean Mahajan and Ors., (2002) 6 SCC 281 [LQ/SC/2002/654] . However, in the plaint on record, a claim was made in US Dollars, for a sum of $ 1,000,000, with interest. This Court thus finds that, in accordance with the view in Forasol (supra), the sum of US $ 1,000,000, and in the alternative, a sum equivalent to US $1,000,000 in Indian Rupees, calculated at the exchange rate prevailing on the date of decree, is payable to the plaintiff respondent.

50. For the above reasons, the appeal has to fail; the judgment and decree of the learned Single Judge is affirmed. The present appeal is dismissed without any order as to costs.