1. The appeal impugns the judgment and decree (dated 23rd February, 2013 of the Court of Addl. District Judge, East District, Karkardooma Courts, Delhi in Civil Suit No.342/2011 filed by the respondent/plaintiff) of recovery of Rs.4 lacs with interest @ 8% per annum from the date of institution of the suit till realization against the appellant pursuant to dismissal of the application filed by the appellant for leave to defend the suit under Order XXXVII of the CPC filed by the respondent.

2. Notice of the appeal was issued and subject to the appellant depositing the decretal amount in this Court, execution stayed. The appellant/defendant did not deposit the decretal amount; resultantly the interim order was vacated, the Trial Court record requisitioned and the appeal posted for hearing for today.

3. The counsels have been heard and the Trial Court record perused.

4. The respondent/plaintiff instituted the suit from which this appeal arises pleading that he had advanced a sum of Rs.4 lacs as a friendly loan to the appellant/defendant in July, 2010, to be repaid in a year’s time; that the appellant/defendant failed to repay the amount and after much persuasion issued a cheque dated 9th August, 2011 for Rs.4 lacs in repayment of the said loan; however the said cheque was dishonoured.

5. The suit was entertained under Order XXXVII of the CPC and summons for appearance and thereafter summons for judgment issued;

6. The appellant/defendant sought leave to defend on the grounds:-

(a). that he had on 2nd March, 2010 purchased a Innova car from the respondent/plaintiff for a consideration of Rs.6,77,400/- out of which Rs.2 lacs was paid immediately in cash and the balance sale consideration was payable in 36 monthly instalments of Rs.13,261/;

(b). that the appellant/defendant had given the cheque on the basis of which the suit is filed to the respondent/plaintiff on 2nd March, 2010 by way of security though this fact was not mentioned in the document executed on that date;

(c). that the appellant/defendant subsequently learnt that the vehicle so sold by the respondent/plaintiff to the appellant/defendant was hypothecated with the ICICI Bank and which fact had been concealed by the respondent/plaintiff at the time of sale;

(d). that the respondent/plaintiff inspite of repeated reminders did not clear the outstandings of ICICI Bank and owing whereto the appellant/defendant was facing difficulty in plying the said vehicle;

(e). that the appellant/defendant paid the instalments of the vehicle till May, 2011 and thereafter in August, 2011 returned over the vehicle to the respondent/plaintiff; and,

(f). that though the respondent/plaintiff was to return the said cheque taken by way of security but did not do so and has misused the same for filing the suit.

7. The respondent/plaintiff filed a reply to the leave to defend application, not controverting the transaction of sale/purchase and return of the vehicle by the appellant/defendant, but controverting that the respondent/plaintiff had concealed the factum of the car being hypothecated with the ICICI Bank and contending that the dues of the ICICI Bank were cleared in October, 2010 itself and that since the appellant/defendant was unable to pay further instalments, the respondent/plaintiff was forced to take back the car.

8. It was thus the case of the respondent/plaintiff, that the loan transaction was independent from the transaction of sale of vehicle.

9. The learned Addl. District Judge dismissed the application of the appellant/defendant for leave to defend and consequently decreed the suit, reasoning (i) that had the cheque on the basis of which the suit was filed been given by way of security in the sale/purchase transaction, the same would have found mention in the document prepared of the sale/purchase transaction; (ii) that if the cheque had been given by way of security for the sale/purchase transaction, the appellant/defendant would not have delivered back possession of the ve