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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Arif S. Doctor, J.
Aslam Shaikh & Ors. - Appellants
Versus
Dinesh Shishupal Punia - Respondent
Summons For Judgment (L) No. 29311 of 2022, in Summary Suit No. 20 of 2022
Decided On : 02-02-2023
Money Lending - Recovery of Loan - Negotiable Instruments Act, 1881 - Summary Suit - [MONEY LENDING] - [RECOVERY OF LOAN] - [Negotiable Instruments Act, 1881] - [Section 138] - The court discussed the provisions of the Money Lenders Act and the defense of money lending. It held that not every loan is axiomatically a money-lending transaction and that the defendant failed to establish that the plaintiff was engaged in the business of money lending. The defense of insufficiency of stamp duty was also rejected. The court found the defense to be devoid of merit and held that the Stamp Act is not enacted to arm a litigant with a weapon of technicality to meet the case of the opponent. The defense of threat and coercion was also discussed, and the court found it to be more improbable than plausible, but granted the defendant conditional leave to defend the suit.
Fact of the Case:
The plaintiffs lent and advanced a total amount of Rs.6,85,00,000/- to the defendant and his wife. The defendant issued post-dated cheques to the plaintiffs, which were returned dishonored. The plaintiffs filed a complaint under Section 138 of the Negotiable Instruments Act, 1881 and also initiated a Summary Suit seeking recovery of Rs.4,00,00,000/- based on a Settlement Agreement. The defendant raised defenses of money lending, insufficiency of stamp duty, and threat and coercion.
Finding of the Court:
The court rejected the defenses of money lending and insufficiency of stamp duty as devoid of merit. It found the defense of threat and coercion to be more improbable than plausible but granted the defendant conditional leave to defend the suit.
Issues: The issues involved the validity of the defenses raised by the defendant, including money lending, insufficiency of stamp duty, and threat and coercion.
Ratio Decidendi: The court held that the defendant failed to establish that the plaintiff was engaged in the business of money lending and rejected the defense of insufficiency of stamp duty. The defense of threat and coercion was found to be more improbable than plausible, but the defendant was granted conditional leave to defend the suit.
Final Decision: The court granted the defendant conditional leave to defend the suit, subject to the deposit of a sum of Rs.4,00,00,000/- with the court within eight weeks, and filing a written statement within four weeks after making the deposit.
JUDGMENT
Arif S. Doctor, J. - The present Summary Suit seeks recovery of an amount of Rs.4,00,00,000/- alongwith interest at the rate of 9% per annum based upon a Settlement Agreement dated 21st September, 2021 ('the said Agreement').
Facts Briefly Stated
2. It is the Plaintiffs' case that they (husband and wife) had lent and advanced monies to the Defendant and the Defendant's wife (one Manisha Punia) over a period of time commencing from the year 2016. The Plaint sets out that the Plaintiffs and the Defendant and his wife resided in the same building and were on friendly terms. The Defendant and his wife were in dire need of funds and had thus approached the Plaintiffs for financial help. It was pursuant to this that the Plaintiffs lent and advanced the following amounts to the Defendant and the Defendant's wife (Manisha Punia), viz.
i. Plaintiff No.1 lent and advanced an amount of Rs.98,50,000/-through 6 separate cheque/RTGS transactions to the Defendant's wife (Manisha Punia).
ii. Plaintiff No. 2 lent and advanced an amount of Rs.1,36,50,000/-through 7 separate cheque/RTGS transactions to the Defendant's wife (Manisha Punia).
iii. Plaintiffs lent and advanced to the Defendant and his wife (Manisha Punia) an amount of Rs.4,50,00,000/- in cash in 8 tranches.
Thus according to the Plaintiffs, the total amount lent and advanced by them to the Defendant and the Defendant's wife (Manisha Punia) as more particularly set out in the Plaint was Rs.6,85,00,000/-.
3. The Plaint sets out that thereafter various Bills of Exchange were issued by the Defendant initially totaling to an amount of Rs.6,85,00,000/- which was then subsequently reduced to Rs.6,50,00,000/- after a payment of Rs.35,00,000/- was made by the Defendant's wife (Manisha Punia) which was adjusted against the total principal amount of Rs.6,85,00,000/-. Thereafter the following three post dated cheques were issued to the Plaintiffs viz.,
i. Cheque No. 001194 dated 1st February, 2021 for Rs.63,50,000/- issued by Defendant and his wife (Manisha Punia) in favour of Plaintiff No.1.
ii. Cheque No. 001195 dated 10th February, 2021 for Rs.1,36,50,000/- issued by Defendant and his wife (Manisha Punia) in favour of Plaintiff No.2.
iii. Cheque No. 103832 dated 10th February, 2021 for Rs.4,50,00,000/- issued by Defendant in favour of Plaintiff No.1.
However, all the three PDCs were returned dishonored as a result of which the Plaintiffs initiated following proceedings under Section 138 of the Negotiable Instruments Act, 1881 before the Metropolitan Magistrate, 44th Court at Andheri, Mumbai viz.,
a) Case No. SS/959/2021 for dishonour of cheque No.001194 dated 1st February, 2021 for the sum of Rs.63,50,000/-.
b) Case No. SS/1039/2021 for dishonour of cheque No.001195 dated 10th February, 2021 for the sum of Rs.1,36,50,000/-.
c) Case No. SS/1042/2021 for dishonour of cheque No.103832 dated 10th February, 2021 for the sum of Rs.4,50,00,000/-.
4. The Plaintiffs also filed a complaint against the Defendant and the Defendant's wife (Manisha Punia) before the Economic Offences Wing (EOW), which was registered as Complaint No.P.E.140/2021. It was during the course of the investigation/proceedings before the EOW, that the said Settlement Agreement was entered into between the Defendant (arrayed as party of the first part therein) and Plaintiff Nos.1 and 2 (arrayed as party of the second and third part respectively therein). Since the Defendant failed and neglected to honor the said Agreement, the Plaintiffs have filed the present Summary Suit.
Submissions of Mr. Bharucha on behalf of the Plaintiffs
5. Mr. Bharucha, learned counsel appearing on behalf of the Plaintiffs invited my attention to the Settlement Agreement and pointed out therefrom that the Defendant had unconditionally and unequivocally undertaken to make the following payments to the Plaintiffs on behalf of his wife and himself viz.
'6. It is hereby agreed by and between the party of the first, second and third part, the party of the First part, on
The main legal point established in the judgment is the application of Section 25(3) of the Indian Contract Act and Section 18(1) of the Limitation Act in determining the validity of a settlement agr....
The court determined that the defendants failed to provide credible evidence of duress or illegality, thus entitling the plaintiff to summary judgment for the loan amount acknowledged in the settleme....
Parties may be estopped from raising claims involved in a previously settled agreement, especially when evidence shows consistent acknowledgment of the debt, absent credible claims of duress or illeg....
The main legal point established in the judgment is the interpretation of the provisions of the Money-Lending Act, 2014, Section 13, and the Commercial Courts Act, 2015, Section 12A, to determine the....
A friendly loan agreement is enforceable even if not attested or stamped, provided it can be proven that both parties understood and accepted the terms, distinguishing it from regulated moneylending ....
A defendant is entitled to unconditional leave to defend if they satisfy the court that they have a substantial defence likely to succeed, or if they raise triable issues indicating a fair or reasona....
The main legal point established in the judgment is the consequences of making false statements on oath and the distinct and new liability arising under the Negotiable Instruments Act when payment is....
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