Gita Mittal, J.

By this order, I propose to dispose of this application which has been filed by the sale defendant under Order 37 Rule 3(5) of the Code of Civil Procedure, 1908 praying for leave to defend the present suit which has been filed under the summary procedure provided under Order 37 of the Code at Civil Procedure, 1908.

2. The suit lias been filed by the plaintiff on the averments that the plaintiff, Shri S.C. Gupta, was carrying on a business of interior contractors as a sole proprietor under the name and style of M/s. S.C. Gupta & Bros. The plaintiff had good relations with Shri Surender Sadhu, a Director in the defendant, a company incorporated under the provisions of the Companies Act, 1956. On account of such good relations, the plaintiff also remained as a Director in the defendant company with effect from 31st May, 2000 till 31st January, 2002.

3. The plaintiff advanced to the defendant several amounts as loan account payee cheques or demand drafts between the period 16th December, 1998 to 13th September, 2000 totalling an amount of Rs. 41lakh. The amount which was advanced by the plaintiff was duly reflected and acknowledged by the defendant as such loan in their books of account, balance sheets and profit and loss accounts, which were prepared and filed before the Registrar of Companies as well as the income tax authorities.

4. In partial discharge of its liability, the defendant paid an amount of Rs. 4 lakh by way of cheque in September, 2000 which was credited to the plaintiffs account on 16th September, 2000. Further loan was requested and between 21st September, 2000 and 25th April, 2001, the plaintiff advanced a further amount of Rs. 37,30,000/-. Details of payments made to the defendant by the plaintiff have been detailed in para.5 of the plaint. Thereafter, the defendant repaid a sum of Rs. 1.50 lakh by two cheques dated 2nd March and 15th March, 2001, At the time of filing of the suit, the defendant was owing a sum of Rs.72,80,000/ - to the plaintiff for which the plaintiff filed the suit on 26th March, 2004.

5. After the suit was filed on 29th March, 2004, the plaintiff filed an application being I.A. No. 4876/2004 seeking amendment of the plaint to L1corporate certain subsequent events! developments which have taken place after the filing of the suit. This application was allowed on 5th August, 2004. By way of the amendment, the plaintiff has brought on record the fact that on 31st March, 2004 and 1st of April, 2004, Shri Surender Sadhu, Managing Director of the defendant approached the plaintiff to settle the outstanding loans. He requested that the defendant was not in a position to repay the entire amount of Rs.72,80,000/- and expressed the desire to make payment in a full and final settlement of its dues by payment of Rs. 47,00,000/-.

6. With a view to maintaining good relations the plaintiff agreed to this proposal and the parties signed a Memorandum of Understanding dated 1st April, 2004. Pursuant to this Memorandum of Understanding, the defendant issued cheques to the plaintiff, however, the cheque dated 5th April, 2004 issued by the defendant in terms of the Memorandum was dishonoured on account of insufficiency of funds in the defendants account. The plaintiff consequently has pleaded, that this Memorandum of Understanding is not binding on the plaintiff. The plaintiff in the amended plaint has restricted the liability of the defendant to Rs. 43,80,000/-.

7. The plaintiff has placed strong reliance on the letter dated 2nd September, 2001 whereby the defendant acknowledged an amount of Rs. 64,30,000/as outstanding and payable to the plaintiff on 31st March, 2001. After 31st March, 2001 the plaintiff advanced a further loan of Rs. 8,50,000/- to the defendant. The defendant issued three cheques to the plaintiff; one dated 17th February, 2004 and two cheques, each dated 8th March, 2004, for the total sum of Rs. 17,00,000/- to the plaintiff in partial discharge of its liability. When presente