Order 10

Order Details: COPY OF ORDER
Pdf Text: CS SCJ-540/25 Kapil Bhardwaj Vs. Anil Kumar
O R D E R
1. The present order shall dispose of an application filed by the
defendant under Order XXXVII Rule 3(5) read with Section
151 of the Code of Civil Procedure, 1908 seeking leave to
defend the summary suit instituted by the plaintiff for
recovery of Rs.3,00,000/- along with pendente lite and future
interest.
2. The brief facts necessary for disposal of the present
application are that the plaintiff has instituted the present suit
under Order XXXVII Rules 1 and 2 CPC on the basis of a
cheque bearing no. 788071 dated 06.06.2020 for a sum of
Rs.3,00,000/-, which was allegedly issued by the defendant
towards discharge of a friendly loan advanced on 06.08.2019
through banking channels. It is the case of the plaintiff that
upon presentation, the said cheque was dishonoured for
insufficiency of funds and despite issuance of legal demand
notice, the defendant failed to make payment.
3. Summons for judgment were issued to the defendant,
pursuant to which the defendant has filed the present
application within limitation seeking leave to defend the suit.
The defendant has denied the existence of any friendly loan
and has taken a plea that the cheque in question was a blank
signed cheque handed over to one third person in connection
with a property transaction and has been misused in collusion
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with the plaintiff. It is also claimed that the alleged liability
has already been discharged.
4. The plaintiff has opposed the application contending that the
defendant has admitted his signatures on the cheque and
receipt of the amount through banking channels, and that the
defence raised is false, frivolous and an afterthought intended
to delay the proceedings.
5. Before adverting to the rival contentions, it is apposite to
refer to the relevant statutory provisions governing summary
suits. Order XXXVII Rule 1 CPC provides for application of
summary procedure to suits based on negotiable instruments
or for recovery of liquidated demands. Order XXXVII Rule 2
CPC enables institution of such suits without the defendant
having an automatic right to defend.
6. Order XXXVII Rule 3(5) CPC specifically provides that the
defendant may, within the prescribed time, apply for leave to
defend the suit by disclosing such facts as may be deemed
sufficient to entitle him to defend. The proviso to the said
Rule empowers the Court to grant leave to defend either
unconditionally or upon such terms as may appear just,
including conditions as to deposit of money.
7. The law relating to grant of leave to defend in summary suits
is well settled. If the defendant raises a substantial defence
which is likely to succeed, unconditional leave ought to be
granted. If the defence raises triable issues but is not free
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from doubt, conditional leave may be granted. However,
where the defence is sham, illusory or moonshine, leave to
defend is liable to be refused.
8. It is also a settled principle that where execution of the
cheque is admitted, a presumption arises in favour of the
holder with respect to consideration and liability, and the
burden shifts upon the defendant to rebut the same by
disclosing a plausible defence.
9. In the present case, it is not disputed that the cheque in
question bears the signatures of the defendant. The defendant
has also not specifically denied the receipt of Rs.3,00,000/- in
his bank account. Thus, prima facie, the foundational facts
necessary for invocation of summary procedure stand
established.
10.The primary defence raised by the defendant is that the
cheque was issued as a blank signed cheque in connection
with a separate property transaction and has been misused by
the plaintiff in collusion with a third party. The defendant has
further alleged that he has repaid the amount in cash and that
certain documents relied upon by the plaintiff are fabricated.
11.However, the defendant has not placed on record any cogent
documentary evidence to substantiate the alleged repayment.
The plea of repayment in cash, in absence of any receipt or
independent proof, appears to be weak at this stage.
Similarly, the allegations regarding misuse of blank cheque
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and existence of a larger conspiracy are broadly stated and
would require strict proof during trial.
12.At the same time, the defence taken by the defendant cannot
be outrightly rejected as sham or illusory. The plea of misuse
of a blank signed cheque and existence of prior dealings
involving a third party, though not substantiated at this stage,
raises triable issues which cannot be adjudicated without
evidence.
13.Thus, the defence raised by the defendant falls in the
category of a plausible but not a strong defence. It does not
inspire confidence to warrant unconditional leave, yet it
cannot be brushed aside so as to deny the defendant an
opportunity to contest the suit.
14.In such circumstances, the settled position of law permits the
Court to grant conditional leave to defend so as to balance
the rights of the plaintiff and the defendant. Imposition of a
condition of deposit ensures that the defendant does not
unnecessarily delay the proceedings while at the same time
safeguarding his right to contest.
15.Considering the totality of facts and circumstances, including
admission of signatures on the cheque, receipt of amount
through banking channel, and the nature of defence raised,
this Court is of the view that grant of conditional leave would
meet the ends of justice.
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16.Accordingly, the application filed by the defendant under
Order XXXVII Rule 3(5) CPC is allowed subject to the
condition that the defendant shall deposit 50% of the suit
amount, i.e., Rs.1,50,000/-, in the form of FDR before this
Court within a period of 30 days from the date of this order.
17.Upon deposit of the aforesaid amount, the defendant shall be
entitled to file a written statement within the prescribed
period and the suit shall thereafter proceed as an ordinary
civil suit in accordance with law.
18.In case of failure to comply with the aforesaid condition
within the stipulated period, the plaintiff shall be entitled to
seek decree forthwith in accordance with law.
19.Application stands disposed off in the aforesaid terms.
Milan Goel
CJ-08 (Central)
23.04.2026/Delhi
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