POORNIMA ENTERPRISES Vs. NAGARJUNA FINANCE LTD

JUDGEMENT

(1.) The respondent filed O.S. 18/94 on the file of the II Addl. Judge, City Civil Court, Hyderabad under Order 37 Rule 3 C.P.C. for recovery of Rs. 7,71,512/- together with interest at the rate of 36 percent per annum. The allegations in the plaint are that the petitioner No. 1 who is distributor for M/s. Sunku Auto Limited in Chittor District for sale and distribution of motor vehicles manufactured by them, approached the respondent company with a request to arrange letter of credit of a scheduled bank for Rs.4,97, 945/- for purchasing five three-wheeler diesel autos and five load carriers for carrying on their business. The 2nd petitioner who is the wife of the 1st petitioner offered her immovable property as collateral security and deposited the title deeds by creating equitable mortgage. The respondent arranged open letter of credit dated 9-7-1992 for the said amount in favour of Sunku Auto Limited and an agreement was also entered into between the plaintiff and the first petitioner on 9-7-1992 as per which the 1st petitioner has to pay the plaintiff a sum of Rs. 10,000/- being the 2% of the letter of credit value towards non-refundable service charges to pay bank charges; pay Rs. 75,000/- towards towards margin money for letter of credit and deliver post dated cheques covering the entire loan amount. In case of default, the plaintiff is entitled to claim interest at 36% towards liquidated damages besides Rs. 1500/- towards expenses. The petitioner failed to honour the post-dated cheques issued for Rs. 4,25,000/- and Rs. 90,000/- in respect of which proceedings under Sec. 138 of the Negotiable Instruments Act are pending. The petitioner filed I.A. No.314/94 seeking unconditional leave to defend the suit stating that the suit claim is false, that the manufacturer managed with the respondent-plaintiff and discounted the bills without delivering the goods to the 1st petitioner, that the plaintiff colluded with the manufacturer to make wrongful loss to the petitioners and that the plaintiff-finance company obtained signatures of the 1st petitioner on blank letter heads and other blank papers and misused them. In the counter, the respondent-plaintiff reiterated what is stated in the plaint and stated that the petition is filed with oblique motive to protract the proceedings. The Court below has refused to give leave and consequently decreed the suit as prayed for.

(2.) Against the order dismissing the I.A., the petitioners have come up in this revision contending that unconditional leave ought to have been granted in view of the plea of the petitioners that the respondent paid the amount to the suppliers without verifying whether the vehicles were delivered to the petitioners or not.

(3.) Mr. A.T.M. Rangaramanujam, learned Counsel for the respondent raised a preliminary objection that the C.R.P. is not maintainable since the suit has been decreed consequent upon the dismissal of the I.A. and the remedy of the petitioners is only to file appeal. This objection is not valid in view of the decision in K. Lalitha Saraswathi Lakshmi case wherein it is held that when the order passed under Order 37 Rule 3 is itself set aside, the subsequent decreeing of the suit passed on such an order cannot survive and that the revision is maintainable even after consequential order of decreeing the suit was passed.