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2012 Supreme(Bom) 1279
High Court of Judicature at Bombay
MOHIT S. SHAH & N.M. JAMDAR, JJ.
Rajesh Laxmichand Udeshi @ Bhatia
Versus
Pravin Hiralal Shah
Appeal (L) No.202 of 2012
In Summons For Judgment No.308 of 2010 In Summary Suit No.673 of 2010
Decided On : 16-07-2012
For the Appellant:Sanjay Jain, Ramesh Jain, Advocates.
For the Respondent:Prateik Parija i/b M/s. Ashwin Ankhad & Associates, Advocates.
Headnote:Civil Procedure Code, 1908 - Order XXXVII, Rule 1 - Negotiable Instrument Act, 1881, Section 139 - Leave to defend summary suit. - In a suit based on dishonoured cheque, only defence that Cheque given as security for some other transaction is not admissible. - The appellant was obliged to give some particulars as to the "some other transaction". No such explanation is forthcoming. Thus, considering the quality of defence, the single Judge has come to the conclusion that this is a case of "no defence". When the cheques were dishonoured and presumption was raised and the appellant wanted the Court to believe that he has a defence, in as much as, the cheques were issued as a security for some other transaction, least he could have done was to give some details of such transaction. The appellant cannot treat the legislative intent behind the statutory presumptions lightly and then try to rely upon the principles enunciated in cases where no such statutory presumption is raised.
The amounts which were paid by the plaintiff to the defendant were received by the defendant and that the defence raised by the appellant/defendant that the dishonoured cheques were issued in respect of some other transaction was not a bona fide defence. The cheques were issued by the defendant in discharge of his liability and presumption under Section 139 of the Negotiable Instruments Act, 1881 is clearly available to the plaintiff. No credible defence has been urged by the appellant/defendant in his affidavit-in-reply, which would entitle him to get leave to defend, much less unconditional leave to defend.
Civil Procedure Code, 1908 - Order XXXVII, Rule 1 - Negotiable Instirements Act, 1881, Sections 138 and 139 - Leave to defend summary suit. - Court, has to keep in mind statutory presumption under Section 139 of Act, while deciding whether or not leave to defend summary suit based on a cheque which is dishonoured should be granted. - When a summary suit instituted is based on a cheque which is dishonoured, effect of Sections 138 and 139 of Negotiable Instruments Act raising statutory presumption that the cheque was issued in discharge of a liability, is a relevant consideration to be kept in mind. The said Sections cast a burden upon the defendant to rebut the presumption. Summary suits instituted on cheques which are dishonoured will, therefore, stand on a higher footing than summary suits instituted on the basis of other documents.
The legislative intent behind enactment of Sections 138 and 139 of the Negotiable Instruments Act is to prevent abuse of the banking system. Thus, one who issues a cheque extends a solemn promise to pay. Based on this promise and action, the recipients arrange their affairs and quite often enter into further transactions. Unless extraordinary circumstances are made out, one who issues cheque is deemed to have undertaken to pay. Negotiable Instruments Act enforces the promise strictly by raising statutory presumption and treating it as an offence. This provision elevates a cheque to a higher status than the other instruments, such as written contract etc. to which no such statutory presumption is attached. What needs to be emphasized is that presumption in respect of a dishonoured cheque places a higher burden on the defendant to elucidate the defence than the burden which is cast on a defendant where the suit is filed on the basis of ordinary instr uments.
In the cases based on dishonour of cheques, the defendant must satisfy the conscience of the Court and cannot take shelter behind the rules formulated primarily in respect of suits based on ordinary instruments. The Court while exercising the discretion to grant leave or otherwise to the defendant in such cases, cannot be oblivious of the legislative intent to place the promise made through a cheque on a higher pedestal than the promise made through an ordinary instrument. This is not to state that moment a summary suit is lodged based on a dishonoured cheque, it must be decreed without anything more. What needs to be emphasised is that the fact that there is a statutory presumption attached to the dishonoured cheque will constitute an important ingredient while considering the question whether leave to defend should be granted in cases of dishonoured cheques and the Court must scrutinise the defence strictly. The object of the summary procedure is ultimately to see that the defendant does not needlessly prolong the litigation by creating untenable, frivolous and casual defences so as to deprive the plaintiff of the monies due to him
Oral Judgment: (Mohit S. Shah, CJ.)
This appeal is directed against the judgment and order dated 20 October 2011 of the learned single Judge of this Court in summons for judgment in the summary suit filed by the respondent herein for an amount of Rs.67,10,000/- together with interest at the rate of 12% p.a. on the principal sum of Rs.61,00,000/-. The learned single Judge has, by the impugned judgment and order, made this summons for judgment absolute and decreed the suit in the sum of Rs.61,00,000/- together with interest at the rate of 12% p.a. from 29 April 2009 till payment and/or realization with costs.
2. The parties had entered into Memorandum of Understanding (MOU) dated 12 May 2009, under which the appellant/defendant was to sell to the plaintiff a flat for consideration of Rs.8.46 crores. It is the case of the plaintiff that the defendant represented that he along with his father and brother had tenancy right in the flat and that the defendant had an authority to enter into MOU.
3. The plaintiff paid aggregate amount of Rs.61,00,000/- by two cheques-cheque dated 6 April 2009 for Rs.11,00,000/- as earnest money and cheque dated 29 April 2009 for Rs.50,00,000/- as part payment. However, the defendant's father and brother did not agree to the MOU being implemented and also denied the defendant's authority to enter into such MOU. The plaintiff's case is that in the circumstances the defendant issued three cheques for sum of Rs.61,00,000/- towards repayment of the amounts paid by the plaintiff to the defendant being cheque dated 30 June 2009 for Rs.25,00,000/-, another cheque dated 5 July 2009 for Rs.25,00,000/-and third cheque dated 10 July 2009 for Rs.11,00,000/-. When the cheques were presented with the plaintiff's banker between October and December 2009, all the cheques were dishonoured.
4. In his affidavit-in-reply dated 20 October 2011, the defendant stated that "the alleged cheques were lying with the plaintiff for security purpose only for some other transactions and the plaintiff misused the same. The same is clear from the date mentioned thereon." The defendant did not give any particulars of the other transactions in respect of which the three cheques were allegedly given by the defendant to the plaintiff. As noted by the learned single Judge, it was not the defence that in respect of the alleged transaction or in respect of MOU, the defendant had subsequently made any payment to the plaintiff. The defendant also contended that interest could not be claimed from 6 April 2009 as the amounts were advanced only on 29 April 2009.
5. After hearing the learned counsel for the parties, the learned single Judge allowed the summons for judgment and passed aforesaid order decreeing the suit in the sum of Rs.61,00,000/-with interest at the rate of 12% p.a. from 29 April 2009 till payment.
6. The learned counsel for the appellant has submitted that the learned single Judge ought to have held that the following defences of the appellant raises triable issues and therefore unconditional leave is required to be granted:-
(a) The receipts purported to have been issued by the defendant in favour of the plaintiff acknowledging receipt of Rs.61,00,000/- have been disputed in the affidavit-in-reply. The signature on the MOU is also disputed as stated in the affidavit-in-reply.
(b) As per the MOU the defendant had agreed to sell only his share in the flat in question and therefore there was no representation that the defendant had right and authority to enter into MOU on behalf of his father and brother. Hence, there was no cause of action for the plaintiff to either terminate the MOU or to claim refund of Rs.61,00,000/-. Under the MOU, the last date for implementation of MOU was 10 July 2009 and, therefore, there could not have been any liability of the defendant under the MOU before 10 July 2009. Hence the very fact that the cheques were issued on or before 10 July 2009 indicates that the cheques were issued in respe
