The court emphasized that a suit under Order XXXVII CPC can be maintainable even if the cheque was not presented for encashment, and that the grant of leave to defend depends on the substantiality and genuineness of the defence raised.

Valmiki J. Mehta, J.

1. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908 (CPC) is filed by the defendant in the Order XXXVII CPC suit impugning the Judgment of the Trial Court dated 13.2.2018 by which the trial court has dismissed the leave to defend application filed by the appellant/defendant and decreed the suit filed on the basis of dishonoured cheque for a sum of Rs.6,00,000/-.

2. The case of the respondent/plaintiff was that the appellant/defendant was granted a friendly loan of Rs. 6,00,000/- on 7.9.2015 and to secure which the appellant/defendant had issued a post dated Cheque No. 324347 drawn on Punjab National Bank, Sector-10, Dwarka, New Delhi dated 7.9.2016. Respondent/plaintiff did not present the cheque for encashment on the request of the appellant/defendant but ultimately on account of non-payment of the dues the respondent/plaintiff issued the Legal Notice dated 2.2.2017 and thereafter filed the subject Order XXXVII suit.

3. In the leave to defend application it is not disputed by the appellant/defendant that he did take a loan of Rs. 6,00,000/-from the respondent/plaintiff and also that the subject cheque was issued by the appellant/defendant in favour of the respondent/plaintiff. The defence of the appellant/defendant was that he had repaid the loan amount to the respondent/plaintiff in the presence of a witness being his brother Sh. Anil Maan on 30.4.2016. It was pleaded that the respondent/plaintiff promised to return back the cheque but he did not do so inspite of reminders. Accordingly unconditional leave to defend was prayed.

4. Trial court has dismissed the leave to defend application by observing that there is no dispute that appellant/defendant took a loan and there is no dispute that appellant/defendant had issued the subject cheque. Trial court has further held that it is not believable that in case the appellant/defendant had returned the loan then he would not have taken back the subject cheque given as security to the respondent/plaintiff. I accept trial court's reasoning as aforesaid.

5. In addition to the aforesaid reasoning of the trial court even assuming that relations between the parties were good and respondent/plaintiff stated that he would return the cheque later, then there was no reason why in spite of repeated reminders as pleaded by the appellant/defendant, since the cheque was not given, appellant/defendant neither issued any legal notice nor even sent formal letter to the respondent/plaintiff of the factum of repayment of loan or asking back return of the subject cheque which was given as security. Therefore the defence of the appellant/defendant is clearly frivolous and vexatious and raises no triable issues.

6. Learned counsel for the appellant/defendant argues that suit was not maintainable under Order XXXVII CPC as the subject cheque was not presented for encashment, however, in my opinion, even if a cheque is not presented for encashment, a cheque is a written agreement containing a liquidated amount, and therefore, a suit on the basis of a non-presented cheque is maintainable under Order XXXVII CPC. I have recently held so in the judgment delivered by this Court in the case of B.L. Kashyap & Sons Ltd. Vs. M/s JMS Steel & Power Corporation & Anr. RFA No.402/2018 decided on 11.5.2018. The relevant paras of this judgment read as under:-

"XXXX XXXX XXXX

8(iv) Even with respect to the cheques issued, though the cheques are issued by the respondent no.2/defendant no.1 yet an Order XXXVII CPC suit for the amount of cheques would also lie against the appellant/defendant no.2 because Order XXXVII Rule 1 CPC does not in any manner state that the cheques which are issued for payments have to be of the person against whom liability is claimed. Obviously this is so as per Order XXXVII Rule 1 CPC because as per Section 2(d) of the Indian Contract Act, 1872 consideration under a contract need not flow/pass only between the parties to a contract. Also it may