Final Order 1

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MHCC010117682019
IN THE COURT OF THE JUDGE, CITY CIVIL COURT
AT GREATER MUMBAI
SUMMONS FOR JUDGMENT NO. 261 OF 2019
IN
SUMMARY SUIT NO. 701 OF 2014
Monisha Ajit Thakur
Having her address at:15, Vimla Mahal, Pedder
Road, Mumbai-400026.
...Plaintiff
VERSUS
1. Glodyne Ventures and Holdings Pvt.Ltd.
A company registered under Indian Companies
Act, 1956, 801, Balarama Bldg. Bandra Kurla
Complex, Bandra (East), Mumbai-400 051.
2. Mr. Annand Sarnaaik Indian Inhabitant of
Bombay, Adult, Occ: not known
And
3. Mrs. Divvyani Annand Sarnaaik
Indian Inhabitant of Bombay, Adult, Occ: Not
known.
Both having their address at 402, Jairaj CHS
Ltd., Opp Income Tax Bldg, Bandra Kurla
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Suit No.701/2014
Complex, Bandra (East), Mumbai-400 051.
4. Messers Glodyne Technoserve Ltd
A Companies Act, 1956, 801, Balarama Bldg.
Bandra Kurla Complex, Bandra (East),
Mumbai-400 051.
...Defendants
Appearance :
Ld. Adv. Ms. Rekha C. Shukla for plaintiff.
Ld. Adv. Mr. Ganesh Ambekar for defendant Nos. 2 and 3.
CORAM : DR. S. D. TAWSHIKAR
(Court Room No.61)
DATE : 06/03/2023.
ORAL ORDER
(Dictated and pronounced in Open Court)
Plaintiff has taken out present Summons for Judgment as
per Sub rule (4) of Rule 3 of Order XXXVII of Code of Civil Procedure,
1908 (hereinafter referred as ‘CPC’ for short) claiming Judgment for
recovery of principal sum of Rs.10 lakhs against defendants along with
interest at the rate of 18% p.a.
2. Defendant Nos.2 and 3 have objected Summons for
Judgment by filing detailed Affidavit-in-reply and thereby claims
unconditional leave to defend. Plaintiff has withdrawn suit against
defendant Nos.1 and 4 Company as per order dated 30-3-2017. Thus,
the Summons for Judgment survives only against defendant Nos.2 and
3, the Directors of Defendant No.1.
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Plaintiff’s case in short-
3. Plaintiff advanced a loan of Rs. 10 lakhs to the defendants
by way of a cheque i.e. a cheque No. 000024 dated 31-10-2011 for
Rs.10 lakhs. The cheque was issued in favour of defendant No.1 and
was duly encashed by the defendants on 01-11-2011. Plaintiff contends
that against the said consideration, defendant No.1 issued a demand
Bill of Exchange of Rs. 10 lakhs on 12-10-2012 on defendant Nos.2, 3
and 4 and same was accepted by them ( hereinafter referred as “subject
Bill of Exchange”).
4. It is contended that defendant No.1 company has paid
interest up to 15-01-2013 by way of cheque. Thereafter, plaintiff
presented the Bill of Exchange with all the defendants, however they
dishonoured the same for non payment. The defendant No.1 had also
issued a cheque of Rs. 10 lakhs on 29-07-2013 in favour of plaintiff.
However, the cheque got dishonoured for the reason “funds
insufficient”.
5. Plaintiff contends that despite repeated requests,
defendants failed to repay the amount advanced, therefore plaintiff
issued demand Notice through his Lawyer on 09-10-2013 and thereby
called upon defendants to pay sum of Rs.10 lakhs along with interest.
Despite service of notice, defendants failed to repay the amount. Hence,
the present suit.
6. By way of Summons for Judgment plaintiff contends that
defendants have not raised any triable issue, much less substantial.
Therefore, no leave to defend can be granted and the Summons for
Judgment be made absolute.
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Defendants’ case –
7. Defendant Nos.2 and 3 who happens to be the Directors of
defendant No.1 company and alleged to be the acceptors of subject Bill
of Exchange, claimed unconditional leave to defend on various grounds
as detailed in the Affidavit-in-reply. The main grounds of contention,
amongst other, can be enlisted as under-
i) Suit is false, frivolous and vexatious.
ii) The plaintiff is involved in illegal money lending
business and thus suit is hit by the provisions of
Bombay Money Lenders Act 1947.
iii) Suit is not maintainable for the reason that the
defendant Nos.1 and 4, is already wound up by the
order of the Hon’ble High Court. Suit cannot proceed
without the leave of Hon’ble High Court.
iv) That the defendants did not issue cheques for the
purpose of paying interest as alleged. Defendant Nos.2
and 3 did not receive the amount from the plaintiff and
have not accepted the subject Bill of Exchange. It is
contended that the blank Bill of Exchange was got
signed by the plaintiff and the Bill was not accepted
in personal capacity.
v) Defendant No.3 was never in charge or responsible for
financial affairs of the defendant No.1 company. She
never conducted day-to-day affairs of defendant No.1.
Defendant No.3 had resigned as Director with effect
from 13-08-2014. Thus, the claim against defendant
No.3 is not maintainable.
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8. Plaintiff has rebutted the contentions of defendants by way
of filing additional affidavit-in-rejoinder on 22-02-2023. So also to
clarify the query raised by this Court about actual receipt of amount by
the defendants.
Points-
9. In the backdrop of the rival contentions raised, following
points arise for my determination. I have recorded findings thereon
along with reasons, as under:-
Sr. No. Points Findings
1. Whether defendant is entitled for
leave to defend ?
If yes, conditional or unconditional?
Defendant Nos. 2 and 3
deserves Conditional
leave to defend.
2. What order ? As per final order.
REASONS
10. It is settled position of law that while dealing with the
Summons for Judgment viz-a-viz leave to defend, Court is not supposed
to delve deep on merits of either side. The court is expected to examine
whether the defendant raises substantial defence or some issues which
needs to be tried. With a view to examine this aspect, it is necessary to
ponder at the contentions and documents relied upon by both the sides.
As to Point No.1-
11. On perusal of the plaint as well as the affidavit-in-reply, it
can be gathered that on one hand plaintiff claims judgment in his
favour and on the other hand defendant Nos.2 and 3 seek unconditional
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leave to defend. I have gone through the pleadings and documents
tendered on record by either side and heard respective counsels at
length.
12. Ms. Shukla, Ld advocate for plaintiff submits that the
plaintiff has paid in all Rs.10 lakhs to the defendants by way of a
cheque. Details thereof are already placed on record. She contends that
the subject Bill of Exchange amounting to Rs.10 lakhs was issued by
defendant No.1 and same was accepted by defendant Nos.1 and 2. The
liability of defendant Nos. 2 and 3 is that of Acceptor and same is
distinct from the liability of defendant No.1. She submits that even
though suit is withdrawn against defendant No.1, plaintiff is still
entitled to recover the amount of Bill of Exchange from defendant Nos.
2 and 3, being acceptors of the Bill.
13. On this point Ld. advocate for plaintiff relies on the
Judgment of Hon’ble Bombay High Court in the case of Union Bank of
India Vs. Ankur Corporation & Ors., AIR 1993 Bombay 297. She also
places reliance on another Judgment of Hon’ble High Court in the case
Ashok Mohansingh Bajaj H.U.F. Vs. Elegant Pharmaceuticals Ltd.and
Ors., 2000 (2) MAH.L.J. 855. Ms. Shukla submits that in identical
circumstances, Hon’ble High Court allowed the claim against the
acceptor of Bill of Exchange despite the company was declared
insolvent.
14. Ld advocate for plaintiff submits that defendants have
admittedly paid interest from time to time up to 15-01-2013 through
cheque, therefore the cause of action accrued thereafter. The plaintiff
has issued demand Notice on 09-10-2013 and same has been replied by
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the defendants on 17-01-2014. She, thus contends that suit is well
within limitation.
15. Ld advocate for plaintiff further places reliance on the
Judgment of Hon’ble Supreme Court in the case of IDBI Tusteeship
Services Limited Vs. Hubtown Ltd., (2017) 1 SCC 568 and contends
that in matter in hand defendants have no substantial defence as well as
the defence is completely frivolous and misleading.
16. Ld advocate for Plaintiff further submits that plaintiff has
placed on record the original subject Bill of Exchange as well as the
original dishonoured cheque along with list of document at Exh.06.
Therefore, defendants do not deserve leave to defend.
17.
Per contra, Mr. Ganesh Ambekar, Ld advocate for
defendant Nos.2 and 3 submits that the transaction is clearly hit by
provisions of Money Lending Act. Plaintiff has not clarified the purpose
behind making payments to the defendant No.1. Plaintiff himself admits
receipt of interest, which is nowhere agreed upon. The transaction is
covered under the definition of “Loan” as defined u/s. 2 (9) (f) of the
Bombay Money Lending Act, 1947.
18. Mr. Ambekar, by pointing out order dated 16-04-2015
passed by the Hon’ble Bombay High Court in Company Petition No.
179/2013 and other connected matters, submits that defendant No.1
Company is admittedly wound up and therefore the present suit is not
maintainable. He submits that the plaintiff ought to have approached
proper forum for seeking recovery of amount from defendant No.1. He
contends that the defendant Nos. 2 and 3 have not received alleged
amount in personal capacity and the defendant Nos. 2 and 3 have never
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executed the alleged bill of exchange. Therefore, the suit itself is not
maintainable.
19. Mr. Ambekar, further submits that in identical matter i.e. in
Summons for Judgment No.108 of 2016 in Summary Suit No. 965 of
2015, the Ld. Judge of this Court has already granted unconditional
leave to defend. He submits that in another identical case i.e. in
Summons for Judgment No. 112 of 2016, in Summary Suit No. 1059 of
2015, the another Ld Judge of this Court has granted conditional leave
to defend on condition of deposition an amount of Rs. 50 lakhs. Said
order was challenged by the present defendant before Hon’ble Bombay
High Court in Writ Petition No. 2449/2017, wherein the Hon’ble
Bombay High Court pleased to set aside the said order and restored the
Summons for Judgment for fresh hearing. Copies of all these orders are
placed on record. Thus, the Ld. adv for defendants, contend that there
are various triable issues involved in the matter, therefore defendants
deserve unconditional leave to defend.
20. The law on the issue of leave to defend has dealt with by
Hon’ble Apex Court in the case of IDBI Trusteeship Services Limited
(supra). The Hon’ble Apex Court pleased to summarize the law on this
issue in following terms.
“17. Accordingly, the principles stated in para 8 of Mechelec
case will now stand superseded, given the amendment of
Order 37 Rule 3 and the binding decision of four judges in
Milkhiram case, as follows:
17.1. 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
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defendant is entitled to unconditional leave to defend the
suit.
17.2 If the defendant raises triable issues indicting that he
has a fair or reasonable defence, although not a positively
good defence, the plaintiff is not entitled to sign judgment,
and the defendant is ordinarily entitled to unconditional
leave to defend.
17.3 Even if the defendant raises triable issues, if a doubt is
left with the trial Judge about the defendant’s good faith, or
the genuineness of the triable issues, the trial Judge may
impose conditions both as to time or mode of trial, as well as
payment into court or furnishing security. Care must be taken
to see that the object of the provisions to assist expeditious
disposal of commercial causes is not defeated. Care must also
be taken to see that such triable issues are not shut out by
unduly severe orders as to deposit or security.
17.4 If the defendant raises a defence which is plausible but
improbable, the trial Judge may impose conditions as to time
or mode of trial, as well as payment into court, or furnishing
security. As such a defence does not raise triable issues,
conditions as to deposit or security or both can extend to the
entire principal sum together with such interest as the court
feels the justice of the case requires.
17.5 If the defendant has no substantial defence and/or
raises no genuine triable issues, and the court finds such
defence to be frivolous or vexatious, then leave to defend the
suit shall be refused and the plaintiff is entitled to judgment
forthwith.
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17.6 If any part of the amount claimed by the plaintiff is
admitted by the defendant to be due from him, leave to
defend the suit, (even if triable issues or a substantial defence
is raised), shall not be granted unless the amount so admitted
to be due is deposited by the defendant in court.”
21. In the backdrop of aforesaid guidelines of the Hon’ble Apex
Court, it is necessary to assess the facts and circumstances of the
present matter. In the matter in hand, the main contention of
defendants is with respect to the maintainability of the suit on the
ground that the defendant Nos.1 and 4 is already wound up. It is
contended by the defendants that as the amount is allegedly paid to the
defendant No.1 company, and therefore defendant Nos.2 and 3 cannot
be personally held liable for its recovery. The plaintiff disputes this
proposition on the basis of the Judgment of Hon’ble Bombay High Court
in the case of Ashok Mohansingh Bajaj H.U.F (supra). In the said
authority, defendant No.1 company was declared Sick Industry. The
Hon’ble High Court after analyzing section 37 of Negotiable Instruments
Act along with Sec. 126 of the Indian Contract Act, pleased to hold that-
“
an acceptor of a bill of exchange cannot be considered
to be guarantor since he is principal debtor himself. The
liability of acceptor is independent since by operation of
law, an acceptor of bill of exchange is also debtor. It is
not even necessary under law for the creditor to file a
suit against the drawer of a bill of exchange since it is
open to such creditor to file a suit for recovery of an
amount of bill of exchange against the acceptor of a bill
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of exchange alone because acceptor of bill of exchange is
the principal debtor.”
22. In the case of Union Bank of India (supra) the Hon’ble
Bombay High Court in para No.9 pleased to lay down the following
ratio.
“It is correct that the drawers are not party to this suit.
However, under provisions of the Negotiable Instruments
Act, the defendants as acceptors of the suit Bill of
Exchange are liable thereunder as principal debtors and
as such, the suit filed merely against the acceptors of the
suit bill of exchange is maintainable in law even though
a separate suit has been filed by the plaintiffs against the
drawers of the suit Bill of Exchange on the basis of the
suit Bill of Exchange along with other reliefs claimed
therein.”
23. Thus, in the light of aforesaid judgments relied upon by
the plaintiff the contentions about the maintainability of the suit against
defendant Nos.2 and 3 cannot be accepted. In matter in hand,
admittedly the subject Bill of Exchange is accepted by the defendant
Nos. 2 and 3. Defendant Nos.2 and 3 though contend that their
signatures were obtained on blank Bill of Exchange, however, on
perusal of the subject Bill of Exchange, said contention seems to be
unacceptable. Considering the position of the defendant Nos. 2 and 3
and the scope of the business they used to conduct, it is difficult to
believe that they would sign on blank papers or blank Bill of Exchange.
The Bill of Exchange being negotiable instrument, carries presumption
under section 118 of Negotiable Instruments Act. Said presumption
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favours the case of plaintiff. Therefore,
prima facie it can be hold that
the suit is maintainable against the defendant Nos.2 and 3 being
acceptors of subject bill of exchange.
24. The contention of defendants that the Ld Judges of this
Court in identical circumstances have granted unconditional leave to
defend, carries no weight in law. The judgments of the said Courts
cannot bind this Court. Therefore, this Court on the assessment of the
material placed before it can very well come to the different conclusion.
Considering the law of precedents/
stare decisis, the orders and
judgments of Superior courts only would be binding on this Court and
not of equivalent courts.
25. I have gone through additional affidavit (Exh.05) filed by
the plaintiff. By way of said affidavit plaintiff has shown that the
amount of 10 lakhs is paid from the bank account of the plaintiff in the
account of defendant No.1 by way of cheque No.000024 on 01-11-
2011. So also from Certificate issued by Bank of Baroda, it can be seen
that an amount of Rs. 1,65,750/- was credited to the account of plaintiff
between 8-11-2011 to 17-04-2012 from defendant No.1. The said
receipt of amount is reflected in the statement of account of the
plaintiff. Therefore,
prima facie find force in the submission of Ld
advocate for plaintiff that the said amount was received by plaintiff
towards the interest. From the aforesaid material, I find sufficient
material placed on record to hold that the subject Bill of Exchange was
issued by defendant No.1 and same was endorsed and accepted by
defendant Nos. 2 and 3. This amounts to accepting liability personally.
Thus, fact of issuance of subject Bill of Exchange against receipt of an
amount of Rs. 10 lakhs by defendants, is substantiated.
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26. Thus, in view of the Guidelines issued by the Hon’ble Apex
Court in the case of IDBI Trusteeship Services Limited (supra), I find
that this is not a fit case where unconditional leave can be granted. In
other words, I do not find probable or
bonafide defence with the
defendant Nos.2 and 3. Therefore, considering the totality of
circumstances, I find conditional leave to defend, subject to depositing
principal amount of Rs. 56 lakhs, as a security, can be granted. Hence, I
answer Point No.1 accordingly.
As to Point No. 2-
27. It is obvious that due to grant of conditional leave to
defend, plaintiff is not entitled for Judgment at this stage. Hence,
Summons for Judgment is bound to be rejected.
28. It is made clear that observations made in this order are
prima facie and without prejudice to the rights of the parties in trial.
29. In view of the above, I pass following order-
ORDER
A Conditional leave to defend is granted to the defendant Nos.2
and 3 subject to their depositing an amount of Rs.10 lakhs
(Rupees Ten Lakhs only) before this Court, as a security, within
eight weeks from the date of this order.
B Consequently, Summons for Judgment No.261 of 2019 is
rejected.
C On depositing said amount by the defendants, same be invested
in Fixed Deposit in Nationalized Bank as per rules, until further
orders.
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D Defendant is at liberty to file Written Statement within next four
weeks after depositing the amount.
E Summons for Judgment No.261 of 2019 is disposed of
accordingly.
(Dr. S. D. Tawshikar)
Judge, City Civil Court, Gr. Mumbai.
Date: 06-03-2023. Court Room No.61
Dictated on : 06-03-2023
Typed on : 06-03-2023
Printed on : 08-03-2023
Corrected on : 08-03-2023
Signed on : 08-03-2023
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
UPLOAD DATE AND TIME NAME OF STENOGRAPHER
08-03-2023 at 5.55p.m. Mrs. V. V. Malgaonkar
Name of the Judge
(with Court Room No.)
Dr. S.D. Tawshikar
C.R. No.61
Date of Pronouncement of JUDGMENT/
ORDER
06-03-2023
JUDGMENT/ORDER signed by P. O. on 08-03-2023
JUDGMENT/ORDER uploaded on 08-03-2023
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