The court established that in cases of dishonoured cheques, statutory interest at 18% per annum is to be granted as per Section 80 of the Negotiable Instruments Act, and the genuineness of the defense must be established to grant leave to defend.

VALMIKI J. MEHTA, J.

C.M. Appl. No. 25770/2018 (for exemption)

1. Exemption allowed, subject to just exceptions.

C.Ms. stands disposed of.

RFA No. 496/2018 and C.M. Appl. No. 25769/2018 (for stay)

2. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) is filed by the defendant no. 1 in the suit impugning the judgment of the trial court dated 21.2.2018 by which trial court has dismissed the leave to defend application filed by the appellant/defendant no. 1/company under Order XXXVII Rule 3(5) CPC and has decreed the suit on the basis of dishonoured cheque for the sum of Rs.10,92,748/-along with statutory interest at 18% per annum as per Section 80 of the Negotiable Instruments Act, 1881 and pendete lite and future interest however only at 6% per annum.

2. The facts of the case are that the respondent/plaintiff filed the subject suit for recovery for a sum of Rs.10,92,748/-being the amount of cheque no. 545556 dated 15.4.2013 drawn on HDFC Bank, Vasant Vihar, New Delhi, and which cheque was issued by the appellant/defendant no. 1 in favour of respondent/plaintiff towards arrears of business related expenses. Respondent/plaintiff was given two cheques, one towards arrears of salary of Rs.29,27,022/-and the second cheque being the subject cheque towards business expenses amounting to Rs.10,92,728/-, and the suit is only for this second cheque.

3. Trial court has rightly applied the principles of grant of leave to defend application in an Order XXXVII CPC suit in terms of the recent judgment of the Supreme Court in the case of IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd., (2017) 1 SCC 568. Trial court has noted that the defence of the appellant/defendant no. 1 was that the subject cheque and the letter dated 31.8.2012 are forged and fabricated, but if that was so, then why the appellant/defendant no. 1 after becoming aware of the alleged forgery took no steps to bring the respondent/plaintiff/culprit before the law. Trial court also rightly notes that the leave to defend application is silent as to how forgery has been done and which is specially so because the cheque bears the signatures of the appellant/defendant no. 1, the cheque was not returned for discrepancy of signatures but only on account of insufficient funds. Also, if the forgery was of 2013, then the trial court rightly notes that till the filing of the suit in 2016 no action was taken by the appellant/defendant no. 1. Trial court also rightly noted that except stating that the cheque was not issued towards any enforceable liability, there were no other details which were given. Trial court has further rightly noted that there is a presumption that a cheque is drawn for consideration due and payable. Trial court thereafter by applying Section 80 of the Negotiable Instruments Act, and which provides for a statutory rate of interest on a dishonoured cheque, has granted interest at 18% per annum till filing of the suit with pendente lite and future interest at 6% per annum. The relevant paragraphs of the impugned judgment are paragraphs 8 to 12 and these paragraphs read as under:-

“8. In IDBI Trusteeship Services Ltd vs Hubtown Ltd MANU/SC/1490/2016, Hon'ble Apex Court observed in para no.18 as below:

“18. Accordingly, the principles stated in paragraph 8 of Mechelec's case will now stand superseded, given the amendment of O.XXXVII R 3 and the binding decision of four judges in Milkhiram's case, as follows:

(a). if the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.

(b). if the defendant raises triable issues indicating that he has a fair or reasonable defence, although, not a positively good defence, the plaintiff is not entitled to sign judgment, ant the defendant is ordinarily entitled to unconditional leave to defend.

(c). even if the defendant