Author: TYC

ISSUE:

Whether the first hearing under Order XV Rule 5 CPC refers to the date of appearance or the date when the court applies its mind to the case?

Whether the power to strike off the tenant’s defense for non-deposit of arrears of rent is discretionary or mandatory?

RULE:

The first hearing in the context of Order XV Rule 5 CPC does not mean the date fixed for the return of summons or the first date of appearance but refers to the stage when the court applies its mind to the case, such as framing of issues or commencement of trial.

The power to strike off the tenant’s defense for non-deposit of rent is not absolute but subject to judicial discretion, requiring consideration of the circumstances, including whether the tenant’s failure was willful or due to a bona fide dispute.

ISSUE:

Whether the suit was maintainable despite the alleged illegal purpose behind the entrustment of jewellery to Lachhmi Narain?

Whether the jewellery was returned to the plaintiff, and if not, whether the appellant was liable to return it or its value?

Whether the liability arising from the alleged misappropriation of the jewellery by Lachhmi Narain was enforceable against the joint family property in the hands of the appellant?

RULE:

The principle of in pari delicto does not apply where the parties are not equally at fault. A person who entrusts property to another, even in furtherance of an improper purpose, may still recover it if the illegal purpose was not carried into effect, if they were less guilty, or if their claim does not require reliance on the illegality. A fiduciary cannot refuse to return entrusted property on the ground that it was given to defeat another’s claim.

A debt is not avyavaharika merely because it arises from a fiduciary obligation. The burden of proving that a debt is avyavaharika (illegal or immoral) rests on the person contesting liability. A son is liable for his father’s debts unless they are illegal. Mere inability to trace entrusted property does not establish misappropriation or illegality, and therefore, the liability remains enforceable against the joint family property.

ISSUE:

Whether the acknowledgment of liability by the defendants in the plaintiff’s account book amounted to an unqualified acknowledgment, creating a fresh cause of action?

Whether the plaintiff’s suit could be maintained solely on the basis of an acknowledgment of liability?

Whether the acknowledgment was obtained through coercion, misrepresentation, or fraud?

Whether the defendants, despite maintaining their own accounts, could dispute the balance without producing their own books of account?

RULE:

An acknowledgment of liability, when unqualified, is sufficient to create a fresh cause of action as it implies a promise to pay. A person who acknowledges a debt as correct is presumed to intend payment, unless they specify otherwise. The law does not require an express promise—accepting the correctness of a balance implies an obligation to discharge it.

A suit can be maintained on an acknowledgment when it is made in the context of prior mutual dealings. An entry in the account book, signed by the debtor, along with a history of transactions, constitutes more than a mere acknowledgment for limitation purposes. It represents an "account stated" between the parties, which can be the basis of a claim.