Order 1

Order Details: Other
Pdf Text: 1 Order in SJ 320/18 in Comm. Suit 705/21
SUMMONS FOR JUDGMENT NO. 320 OF 2018
IN
COMMERCIAL SUIT NO. 705 OF 2021
CNR NO. : MHCC010137982018
Exh.5
First Credit & Finance Company Pvt. Ltd.
A Company registered under the Companies
Act, 1956, and having its registered office
at 509B, 507 Neelkanth, 98,
Marine Drive, Mumbai – 400 002. ….Plaintiff
Versus
1. Ahuja Properties & Developers
A partnership firm having its office at
A/201, Rajpipla, Opp. Standard Chartered
Bank, Linking Road, Santacruz (W),
Mumbai – 400 054.
2. Ahuja Developers
A partnership firm having its office at
A/201, Rajpipla, Opp. Standard Chartered
Bank, Linking Road, Santacruz (W),
Mumbai – 400 054.
3. Jagdish Ahuja
A/201, Rajpipla, Opp. Standard Chartered
Bank, Linking Road, Santacruz (W),
Mumbai – 400 054.
4. Gautam Ahuja
A/201, Rajpipla, Opp. Standard Chartered
Bank, Linking Road, Santacruz (W),
Mumbai – 400 054. ...Defendants
Appearance:
Adv. Suprabh Jain alongwith Adv. Shariq Shaikh alongwith
Pushpavijay Kanoji for Plaintiff.
Adv. Ram Shatalwar h/f. Adv. Naved Chawdhary for Defendants.
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CORAM : SHRI. A.S.SALGAR
ADHOC JUDGE,
(C.R.NO.31)
DATED : 8th FEBRUARY 2023
ORAL ORDER
(Delivered on : 08.02.2023)
This Summons for Judgment is taken out by the plaintiff
under Order 37 of the Code of Civil Procedure, 1908 requesting to pass
Judgment and Decree against the defendants for the total sum of
Rs.7,04,500/. The plaintiff has filed the present suit for the recovery of
the said amount along with future interest.
2. The plaintiff moved this Summons for Judgment on
04.10.2018. Perused the Summons for Judgment, Affidavitinsupport
of Summons for Judgment and Affidavitinreply of the defendants to
the Summons for Judgment. I have gone through the suit proceedings.
Heard Learned Counsel Suprabh Jain for the plaintiff.
Brief facts of the plaintiff's case is as under:
3. The plaintiff is a Company incorporated under the
provisions of the Indian Companies Act, 1956. The plaintiff is
represented by its Director. The defendant nos. 1 and 2 are the
partnership firms registered under the provisions of the Indian
Partnership Act, 1932. The defendant nos. 3 and 4 are partners of the
defendant nos. 1 & 2 partnership firm. In 2015, the defendant nos. 3
and 4 on behalf of defendant no. 1 approached the plaintiff
representing that they were in need of funds for carrying out business
operations of the defendant no. 1 and requested the plaintiff to provide
a loan. On the assurance given by defendant nos. 3 and 4, the plaintiff
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agreed to give loan of Rs. 5,00,000/ at the rate of 23.4% per annum,
which would become payable by the defendant no. 1 to the plaintiff on
demand. On 28.12.2015, the plaintiff issued a cheque of
Rs.5,00,000/ in favour of defendant no. 1. As agreed between the
parties, the defendant no. 1 drew a bill of exchange dated 28.12.2015
in favour of the plaintiff, which was endorsed and accepted by the
defendant no. 2 for acknowledging debt. The bill of exchange was
subsequently renewed by the defendant no. 1 by drawing another bill of
exchange dated 01.04.2016, which was accepted by defendant no. 2.
The defendant no. 1 also issued a cheque dated 30.06.2016 for
Rs.5,00,000/ towards discharge of the loan amount. The defendant
nos. 3 and 4 requested the plaintiff not to deposit the cheque and keep
the same in abeyance. Meantime, the defendants paid an amount of
Rs.63,412/ towards interest. The defendant no. 1 also issued another
cheque dated 30.03.2017 for Rs. 5,00,000/ towards the repayment of
the loan amount, which was deposited by the plaintiff in the bank. The
said cheque was dishonoured. On the instruction of the defendants, the
plaintiff again deposited the cheque, which was returned dishonoured.
The plaintiff made several attempts to contact the defendants
requesting them to make the repayment of the loan amount, but the
defendants gave false assurances. Therefore, on 28.07.2017 the
defendant no. 1 addressed a letter to the plaintiff stating that the
amount paid by it to the plaintiff during the financial year 20162017
be shown as a principal repayment in its books and not as interest. The
plaintiff also sent a legal notice on 22.12.2017 to the defendants for
repaying the loan amount. The defendants replied to the said notice.
Since the defendants failed to repay the amount, the plaintiff was
constrained to file the present suit against the defendants for the
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recovery of the outstanding amount as referred in para no. 6 of the
plaint. To recover the amount of Rs.7,04,500/, the plaintiff has filed
this suit and on appearance of the defendants, filed this Summons for
Judgment and prayed for decree against the defendants.
4. The defendants submitted reply to the Summons for
Judgment and contended that the plaintiff has not approached the
Court with clean hands. The suit is not maintainable. The plaintiff has
no cause of action to file the suit. There is not any agreement between
the parties. The alleged bill of exchange has not been presented for
payment in accordance with the provisions of Negotiable Instruments
Act. Lastly, the defendants prayed for dismissal of Summons for
Judgment.
5. Learned Counsel Suprabh Jain for the plaintiff has referred
the contents in the plaint and has pointed out details in the documents
annexed thereto in the course of his argument. According to him, the
plaintiff has advanced an amount of Rs.5,00,000/ to the defendants
and the defendants drew a bill of exchange in favour of the plaintiff.
The defendants also issued a cheque of Rs.5,00,000/ in favour of the
plaintiff. The defendants made part payments for discharging their
liability.
6. Learned Advocate for the plaintiff Suprabh Jain has relied
upon following rulings of Hon’ble Supreme Court and Judgment of
Hon’ble Bombay High Court and Rajasthan High Court :
a) Hon'ble Rajasthan High Court in the case of Mangu Singh
Vs. Mehra Ram : 2002 SCC OnLine Raj 4;
b) Hon'ble Bombay High Court in the case of Ganesh
Madhavrao Hawaldar Vs. Mithalal Keshaolal Dave :
1999(1) Mh.L.J. 110;
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c) Hon'ble Bombay High Court in the case of Wolstenholme
International Ltd. Vs. Twin Stars Industrial Corporation :
2002(5) Mh.L.J. 121;
d) Hon'ble Bombay High Court in the case of Rajesh
Laxmichand Udeshi @ Bhatia Vs. Pravin Hiralal Shah in
Appeal (L) No. 202 of 2012 in Summons for Judgment
No. 308 of 2010 in Summary Suit No. 673 of 2010 dated
16th July 2012.
By relying upon the observations in the above citations,
Learned Counsel Suprabh Jain for the plaintiff submitted that the
defendants do not have defence. Lastly, he prayed for allowing the
Summons for Judgment and decreeing the suit of the plaintiff along
with interest. The plaintiff also filed written argument at Exh.4.
7. The defendants and their Advocate remained absent during
argument. Since 19.12.2022, the defendants were given opportunity to
argue the Summons for Judgment, but the defendants failed to argue
the Summons for Judgment. Hence, the matter was posted without
argument of the defendants.
8. On perusal of the material on record and submission, it is
clear that as per the contention of the plaintiff, the company has
advanced a loan of Rs.5,00,000/ in favour of the defendants by cheque.
The plaintiff placed on record the copy of the bank statement showing
the payment made by the plaintiff to the defendant no. 1 by cheque at
Exh.B. The plaintiff also placed on record the copies of Bills of Exchange
at Exh.'C' which shows that the defendant no. 1 has drawn the Bills of
Exchange in favour of the plaintiff and it was duly accepted by the
defendant no. 2. The said Bill of Exchange also shows the
acknowledgment of debt and liability of the defendants. The plaintiff
also placed on record the copy of cheques dated 30.06.2016 and
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30.03.2017 issued by the defendant no. 1 in favour of the plaintiff
towards discharge of said loan. The said cheque is at Exh.'D' and 'E'
respectively. The said cheques were dishonoured. The memo of bank
shows that the said cheques were dishonoured due to insufficient funds.
The copy of letter dated 28.07.2017 at Exh.'H' shows that the
defendants in the said letter has admitted his liability. The present suit
is based on the cheque that was dishonoured. The plaintiff has received
a sum of Rs.63,412/ towards part consideration. The defendants also
issued cheques in favour of the plaintiff, which were dishonoured.
Based on these dishonoured cheques, the present Summary Suit has
been filed. The Negotiable Instruments Act was enacted for defining
and amending the law related to Promissory Note, Bill of Exchange and
cheques.
9. The Hon'ble Bombay Court in the case of Rajesh
Laxmichand Udeshi @ Bhatia (supra) it is observed as under :
“When a summary suit instituted is based on a cheque which is
dishonoured, effect of Sections 138 and 139 of Negotiable
Instruments Act raising statutory presumption that the cheque
was issued in discharge of a liability, is a relevant consideration
to be kept in mind. The said Sections cast a burden upon the
defendant to rebut the presumption. Summary suits instituted on
cheques which are dishonoured will, therefore, stand on a higher
footing than summary suits instituted on the basis of other
documents. In such cases, the Court will have to take into
consideration the statutory presumption which is raised when
the cheques are dishonoured. The object behind providing a
statutory presumption under the Negotiable Instruments Act has
to be kept in mind while judging the credibility of a defence
raised by the defendant in summary suit. Thus, the test of more
than “shadowy” and less than “probable” as adverted to by the
Apex Court cannot apply in cases where the law requires a
person to explain certain state of affairs. The judgments which
are relied upon by the learned counsel do not consider the effect
of the statutory presumptions raised under the Negotiable
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Instruments Act when a cheque is dishonoured. In our opinion,
when a cheque is dishonoured, the Court is enjoined with the
duty to scrutinize the defence put up by the defendant with a
much higher degree of care and circumspection. Such summary
suits cannot be treated as on par with the cases instituted on
contracts or invoices etc. where such statutory presumptions do
not operate. What needs to be emphasized is that the
presumption in respect of a dishonoured cheque places a higher
burden on the defendant to elucidate the defence than the
burden which is cast on a defendant where the suit is filed on the
basis of ordinary instruments”.
10. I have considered the defence raised by the defendants in
the reply. The only defence raised by the defendants is that the cheques
were given as a collateral security. The defendants were obliged to give
some particulars of collateral security. No such explanation is
forthcoming. This is a case of “no defence”. When the cheques were
dishonoured and presumption was raised and the defendants wanted
the Court to believe that he has a defence, in as much as, the cheques
were issued as a security for some other transaction, the defendants
could have done was to give some details of such transaction.
11. The defendants further contended that the Bill of Exchange
is insufficiently stamped. Hence, it is not admissible in evidence. This
contention of the defendants cannot be accepted. The plaintiff has filed
the suit and the said suit is based upon dishonoured cheque and not on
Bill of Exchange. No stamp duty is payable on Bill of Exchange payable
on demand. Learned Advocate for the plaintiff rightly submitted the
ruling of Wolstenholme International Ltd. Vs. Twin Stars Industrial
Corporation (Supra).
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12. In the present case, the defendant no. 1 issued a cheque in
favour of the plaintiff for discharge of the said loan amount. The said
cheque was dishonoured. The effect of dishonoured cheque in law and
its effects on summary procedure needs to be considered. The
Negotiable Instruments Act was enacted for defining and amending the
law relating to Promissory Notes, Bill of Exchange and Cheques.
Chapter XIII of the Act contains special rules of evidence including
Section 118(a) providing that until the contrary is proved, it shall be
presumed that every negotiable instrument was made or drawn for
consideration. Section 138 lays down that when a cheque issued by the
party is dishonoured under the circumstances, then offence under
Section 138 is deemed to have been committed. The legislature has
incorporated a presumption of law by way of Section 139 of the
Negotiable Instruments Act that when a cheque is dishonoured, there
shall be a statutory presumption as regards existence of a debt or
liability. When a Summary Suit instituted is based on a cheque which is
dishonoured, effect of Sections 138 and 139 of Negotiable Instruments
Act raising statutory presumption that the cheque was issued in
discharge of a liability, is a relevant consideration to be kept in mind.
The said Sections cast a burden upon the defendants to rebut the
presumption. In such cases, the Court will have to take into
consideration the statutory presumption which is raised when the
cheques are dishonoured. What needs to be emphasized is that
presumption in respect of a dishonoured cheque places a higher burden
on the defendants to elucidate the defence than the burden which is
cast on a defendants where the suit is filed on the basis of ordinary
instruments. Keeping the position in mind, I have considered the
defence raised by the defendants. The amounts which were paid by the
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plaintiff to the defendants were received by the defendants and the
defence raised by the defendants that the cheque was issued only for
collateral security is not bonafide defence. The cheque was issued by
the defendants in discharge of his liability and the presumption under
Section 138 of the Negotiable Instruments Act is clearly availed to the
plaintiff.
13. In the present case, the plaintiff has sufficiently established
that he advanced a friendly loan to the defendants by cheque and the
defendant no. 1 also issued a cheque towards discharge of liability.
Therefore, the plaintiff is entitled to claim outstanding amount from the
defendants. Hence, the Summons for Judgment needs to be allowed
and I proceed to pass the following order :
ORDER
1. Summons for Judgment No. 320 of 2018 is allowed.
2. Commercial Suit No. 705 of 2021 is decreed with
costs.
3. The defendant nos. 1 to 4 are jointly and severally
liable to pay to the plaintiff a sum of Rs.7,04,500/
(Rs. Seven Lakhs Four Thousand and Five Hundred
only) along with interest at the rate of 12% per
annum on the principal amount of Rs.5,00,000/
from the date of filing of the suit till realization
within three months from the date of this decree.
4. The defendants shall bear the cost of the suit.
5. Court fee be refunded to the plaintiff as per rule.
6. Decree be drawn up accordingly.
7. The proceeding of Summons for Judgment No. 320
of 2018 is closed.
Dated : 08.02.2023 (A.S. Salgar)
Adhoc Judge,
City Civil Court
Gr. Mumbai.
Dictated on : 08.02.2023
Typed on : 10.02.2023
Checked & Signed by HHJ on : 02.03.2023
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL SIGNED
JUDGMENT/ORDER”
UPLOAD DATE TIME NAME OF STENOGRAPHER
02.03.2023 1.56 p.m. Prachi Y. Potdar
Stenographer – Grade I
Name of the Judge HHJ Shri. A.S. Salgar
(C.R.NO.31)
Date of Pronouncement of
Judgment/Order.
08.02.2023
Judgment/order signed by P.O on 02.03.2023
Judgment/order uploaded on 02.03.2023
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