Rashmi Vijay Rijhwani v. Nisha Purshotam Mirani

16. Mrs. Singh further submitted that the summary suit itself was not tenable. The basis of the suit is an honoured cheque under which the amount was transferred to the joint account of the defendant and Kamal. A summary suit is not maintainable on a honoured cheque as it can not be said to be a suit based on negotiable instrument. To lend support to this submission, Mrs. Singh placed a strong reliance on a Full Bench Judgment of this Court in the case of Jyotsna K. Valia vs. T.S. Parekh and Co.[1]

17. It was further submitted that the learned Judge was in error 1 2007 (4) Mh.L.J. 517. Vishal Parekar, PS...[5] in holding that the defendant had acknowledged the liability. The said communication, was addressed in the context of the stand of Kamal in the proceeding under the Protection of Women From Domestic Violence Act, 2005 that, he had suffered complete loss in the said company. Therefore, the defendant was constrained to resign from the Board of Directors of the said company and seek refund of capital. Inviting attention of the Court to the affidavit in rejoinder filed in this petition, Mrs. Singh attempted to explain away the said demand by asserting that the defendant was to, in turn, return the amount to the plaintiff.

18. Per contra, laying emphasis on the said email dated 18th March, 2020 and the aforesaid assertion in the rejoinder, Mr. Jagdish Choudhary, the learned counsel for the respondent, forcefully submitted that the aforesaid documents contain a clear and categorical admission of the liability. In fact, by way of rejoinder, the defendant had tried to dilute the admission by claiming that the amount was to be repaid to the plaintiff. That, in itself, according to Mr. Choudhary, constitutes an acknowledgment of the debt.

19. Refuting the contentions on behalf of the petitioner that the suit in the present form is not maintainable as a summary suit as it is based on an honoured cheque, Mr. Choudhary urged with tenacity Vishal Parekar, PS...[6] that the suit is for recovery of a debt or liquidated amount. Such a suit is maintainable sans a written contract, was the thrust of the submission of Mr. Choudhary. To buttress this submission Mr. Choudhary placed a strong reliance on a Division Bench judgment of this Court in the case of Gokuldas Poddar vs. Ramrikhdas Parasrampuria and Co.2.

20. In the said case it was enunciated that in the context of Rule 2 of Order 37, as it then stood, the rule itself assumed that the contract, on which the plaintiff is suing, need not be a contract in writing. It may even be an implied contract. But so long as there is a debt or liquidated demand which becomes payable under such a contract, the plaintiff is entitled to sue for the amount due under the contract.

21. Mr. Choudhary submitted that the Full Bench Judgment in the case of Jyotsna Valia (supra) does not govern the facts of the case. The decision in the case of Purnima Jaitly vs. Ravi Bansi Jaisingh[3] rendered by a learned single Judge can be said to be per incuriam the Division Bench Judgment in the case of Gokuldas Poddar (supra).

22. Mr. Choudhary, would further urge that the email dated 18th March, 2020 constitutes a clear acknowledgment. The demand for 2 1954 (ILR) Bombay Series 507. 3 2004(1) Mh.L.J. 114. Vishal Parekar, PS...[7] the refund of the amount of the paid up share capital, implies that the defendant had borrowed the amount from the plaintiff to finance the acquisition of the shares. To this end, Mr. Choudhary placed reliance of the judgment in the case of State of Kerala vs. T.M. Chacko[4].

23. In the said case, in the context of the provisions contained in section 18 of the Limitation Act, the Supreme Court enunciated that to treat a writing signed by the party as an acknowledgment, the person acknowledging must be conscious of his liability and the commitment should be made towards that liability. It need not be specific but if necessary facts which constitute the liability are admitted, an acknowledgment may be inferred from such an admission.

24. Lastly, Mr. Choudhary submitted that, having regard to the fact that only 25% of the principal amount has been ordered to be deposited, the impugned order, even otherwise, does not warrant interference in exercise of the writ jurisdiction.

25. The aforesaid submissions now fall for consideration.

26. Evidently, the defendant and her husband Kamal and the plaintiff have turned astray on account of the matrimonial dispute. In the trail of marital discord a number of proceedings have been filed. From a meaningful reading of the plaint, the substance of 4 (2000) 9 Supreme Court Cases 722. Vishal Parekar, PS...[8] which has been narrated above, in a little detail, it becomes explicitly clear that the genesis of the instant dispute is also in the marital discord, nay, in paragraph 4.10 of the plaint, the plaintiff refers to the proceedings under the Protection of Women From Domestic Violence Act, 2005 before the the Magistrate wherein her son Kamal had purportedly placed on record the losses suffered in the company, and, thereupon, the defendant tendered resignation and demanded refund of the capital vide an email dated 18th March,

2020.

27. The prayer for grant of an unconditional leave was thus required to be appreciated keeping in view the aforesaid genesis of the dispute.

28. Before adverting to deal with the submission as regards the tenability of the suit in the present form as a summary suit, it may be expedient to note few uncontroverted facts. It emerges from the material on record that a sum of Rs. 13,23,000/- was transferred from the account of plaintiff maintained with Kotak Mahindra Bank, vide cheque No. 654, to an account No. 2111494617 maintained with Kotak Mahindra in the names of defendant and Kamal Mirani, on 20th June, 2018. On the very day, the said amount was transferred to the account of the company. Indisputably, the defendant and Kamal were then cohabiting together. Vishal Parekar, PS...[9]

29. The contentions of the defendant that at that point of time Kamal was managing her affairs and even operated the said joint account is required to be appreciated in the aforesaid backdrop.

30. The moot question that wrenches to the fore is, whether the aforesaid transfer of the amount from the account of the plaintiff to the joint account of the defendant and Kamal, evidenced by the extracts of the bank accounts, constitute the debt or liquidated demand in money covered by Rule 1(2) of Order 37 of the Code. Sub rule (2) of Rule 1 of Order 37 reads as under:- “(2) Subject to the provisions of sub-rule (1), the Order applies to the following classes of suits. Namely:— (a) suits upon bills of exchange, hundies and promissory notes; (b) suits in which the plaintiff seeks only to recover a debt or liquidated demand in money payable by the defendant, with or without interest, arising,—

(i) on a written contract; or

(ii) on an enactment, where the sum sought to be recovered is a fixed sum of money or in the nature of a debt other than a penalty; or

(iii) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.

(iv) suit for recovery of receivables instituted by any assignee of a receivable.”

31. In the facts of the case, clause (a) does not apply as the plaintiff does not seek to recover the amount covered by the instruments, enumerated therein. The plaintiff professedly claimed to recover the debt or liquidated demand in money. Undisputedly, there is no written contract. The endeavour of Mr.Choudhary was to persuade the Court to hold that since the suit is based on debt or Vishal Parekar, PS...10 liquidated demand in money, absence of written contract, did not matter. In contrast, it was the submission of Mrs. Singh that the suit rests on honoured cheque and, therefore, it is beyond the purview of sub rule (2) of Rule 1, Order 37 of the Code.

32. The Full Bench Judgment of this Court in the case of Jyotsna Valia (supra) squarely addresses the controversy sought to be raised in the instant case. In the said case, the Full Bench considered the tenability of the suit based on various types of documents, including an honoured cheque. The Full Bench held that, a summary suit would not lie on “honoured cheque”. The observations in paragraph Nos. 26 and 27 are material and hence extracted below:- 26] Reference may now be made to a judgment on honoured cheque, in the case of Purnima Jaitly v. Ravi Bansi Jaisingh 2004(1) Mh.L.J. 114. In that case, it was contended that a suit for recovery of loan which was advanced by a Plaintiff by a cheque, would be a suit based on a bill of exchange. Negating the said contention, the Court held that; "It is true that a cheque is a bill of exchange, a special type of bill of exchange which is drawn on a bank. However, a suit upon a cheque (bill of exchange) means a suit to recover money due on a cheque (bill of exchange) drawn by the defendant, which is dishonoured." In such a case, the suit must be for recovery of money on a cheque drawn in favour of or endorsed to the plaintiff. A suit, however for recovery of a loan which was advanced by the plaintiff by a cheque is not a suit upon a cheque or a bill of exchange and as such is not maintainable as a summary suit. The contention of the Plaintiff that the suit is upon a bill of exchange was rejected. Reference may also be made to to the judgment in the case of The Central Railway Employees Co-operative Credit Society v. Bank of Baroda. In that case, the Plaintiff had issued crossed cheques for Rs. 1,75,000/- for short term deposit by the bank. The bank encashed the cheque but the amount of cheque was siphoned by the bank officials. A learned Single Judge whilst holding that a Summary Suit was maintainable, held that the Plaintiff society seeks to recover a debt payable by the Defendants bank with interest, arising on a written Vishal Parekar, PS...11 contract. The Court held that to hold otherwise, would be to cause loss of faith and confidence of the business community and the ordinary citizens in the banking system. This however was not a case of honoured cheque. 27] From the above discussion it is clear that a summary suit would not lie on a settled account which is not confirmed by the Defendant and "on honoured cheque". Items (II) and (IV) of para 2 are answered accordingly. (emphasis supplied)

33. Mr. Choudhary made an earnest endeavour to distinguish the aforesaid judgment on the premise that in view of the Bombay Amendment to Order 37, the summary suit to recover the debt or liquidated demand for money was maintainable. A brief legislative history of Order XXXVII Rule 2 would be apposite. A…. Order XXXVII Rule 2, as originally enacted read as under:- “All suits upon bills of exchange, hundies and promissory notes, may, in case the Plaintiff desires to proceed hereunder, be instituted by presenting the plaint in the form prescribed, but the summons shall be in Form No. 4 in Appendix B or in such other form as may be from time to time prescribed.”

Court, the provisions of Order XXXVII Rule 2 of the Code was Vishal Parekar, PS...12 substituted as under:-

34. From a careful perusal of the successive amendments, it becomes evident that under the 1936 Amendment, the expression used was, “a debt or liquidated demand in money payable by the defendant with or without interest, arising on a contract express or implied.” However, under the 1966 Amendment, the expression used was, “arising on a written contract”. Two things, become clear. First by 1966 Amendment, the word “written” was prefixed before “contract”. Second, the words “express or implied” which found mention in 1936 Amendment, were deleted.

35. Thus, since 1966 amendment, the existence of a written contract for a recovery of a debt or liquidated demand in money is a Vishal Parekar, PS...13 pre-condition if the summary suit is to be instituted to recover a debt or liquidated demand in money arising out of a contract. The Full Bench in the case of Jyotsna Valia (supra) enunciated that after 1996 Bombay Amendment and 1976 Amendment to the Code, the summary suit can only be filed if there be a written contract. The observations in paragraph 9 are material and hence extracted below:-

9. The terminology used in the Bombay amendment and the 1976 amendment to the Code of Civil Procedure, is similar. In answering the reference we shall consider the predicates of Order XXXVII under the Bombay amendment. The said rule itself provides that the debt or liquidated demand in money payable by the defendant, with or without interest, must arise on a written contract. The rule before the 1966 Bombay amendment and the 1976 Central amendment to the Civil Procedure Code used the expression "arising on a contract express or implied" and this was substituted by the words "arising on a written contract". There can be therefore no dispute that after the 1966 Bombay amendment and the 1976 amendment to the Civil Procedure Code, the summary suit can only be filed if there be on a written contract. In other words, no Summary Suit can lie on an implied contract. There seems however some confusion as to the expression an implied contract and "implied terms in a written contract". The expression "implied term in a written contract" in law is distinct and different from an implied contract. We will consider this aspect of the matter whilst construing the legislative changes.

36. In view of aforesaid exposition of law, I find it rather difficult to accede to the submission of Mr. Choudhary that a suit for recovery of debt or liquidated demand in money, as such, is maintainable even in the absence of a written contract. The reliance by Mr. Choudhary on the decision in the case of Gokuldas Podar (supra), is misplaced. Vishal Parekar, PS...14

37. In the said case, the Division Bench was considering the position as it obtained before 1966 Bombay Amendment. At that time, a summary suit to recover a debt or liquidated demand in money arising on a contract, express or implied, was tenable. The requirement of a written contract, and the deletion of the expression, “express or implied” was the result of 1966 Bombay Amendment, which position has since been continued under 1976 Amendment to the Code.

38. This propels me to the case based on the admission of liability. A clear admission of liability in writing may not present much difficulty. However, an acknowledgment of liability may be asserted in myriad forms. In such a situation, the nature of the document under which the defendant is alleged to have acknowledged debt or liability assumes critical salience. The Court has to pose unto itself a question, as to whether the document pressed into service as an acknowledgment in writing constitutes the acknowledgment of the debt or liability ?

39. Reverting to the facts of the case, in my considered view, the communication dated 18th March, 2020, could not have been read torn out of context and de hors the genesis of the dispute between the parties. Two factors assume significance.

40. One, the relationship between the parties, when the amount Vishal Parekar, PS...15 was transferred from the account of defendant and Kamal.

41. In this context, the defendant has categorically asserted that Kamal was in control of her account as well and the corporate entity Kamya Forex and Gold India Private Limited. As noted above, the amount was instantaneously transferred from the joint account of the defendant and Kamal to the account of the said company. The defendant has, thus, as noted by the learned Judge also, raised a triable issue as to whether the said borrowing from the plaintiff and transfer thereof to the account of the company, was out of the own volition of the defendant.

42. Two, by an order dated 24th August, 2022 in Notice of Motion No. 2717 of 2021, the City Civil Court had declined to pass a decree on admission on the basis of the very email dated 18th March, 2020. The defendant has also explained the circumstances in which she was constrained to address the said communication to Kamal, namely the stand of Kamal in a proceeding under the Domestic Violence Act, 2005 that he had suffered loss in the said venture. Thus, the resignation from the post of the Director of the company and the demand for the refund of the share capital ought to have been appreciated in the aforesaid context.

43. At any rate, once the defendant raises a triable issue, ordinarily, an unconditional leave to defend the suit ought to be Vishal Parekar, PS...16 granted. A useful reference, in this context can made to the judgment of the Supreme Court in the case of B. L. Kashyap and Sons Ltd. vs. M/s. JMS Steels and Power Corporation and Another[5], In the said case, the Supreme Court culled out the principles in paragraph 33.[3] as under:- 33.3] Therefore, while dealing with an application seeking leave to defend, it would not be a correct approach to proceed as if denying the leave is the rule or that the leave to defend is to be granted only in exceptional cases or only in cases where the defence would appear to be a meritorious one. Even in the case of raising of triable issues, with the defendant indicating his having a fair or reasonable defence, he is ordinarily entitled to unconditional leave to defend unless there be any strong reason to deny the leave. It gets perforce reiterated that even if there remains a reasonable doubt about the probability of defence, sterner or higher conditions as stated above could be imposed while granting leave but, denying the leave would be ordinarily countenanced only in such cases where the defendant fails to show any genuine triable issue and the Court finds the defence to be frivolous or vexatious.

44. The conspectus of aforesaid consideration is that the defendant deserves an unconditional leave to defend the suit. In the facts of the case at hand, a direction for deposit of even 25% of the sum of Rs. 13,23,000/- operates onerously, if viewed through the prism of the situation in life of the defendant. I am, therefore, impelled to interfere with the impugned order. Hence, the following order.

ORDER 1}The petition stands allowed. 5 (2022) 3 Supreme Court Cases 294. Vishal Parekar, PS...17 2} The impugned order granting conditional leave to defend the suit stands quashed and set aside. 3} Unconditional leave to defend the suit is granted to the defendant. 4} The amount of Rs. 2,00,000/-, deposited by the petitionerdefendant pursuant to the order dated 13th November, 2024, be refunded to the defendant along with interest accrued thereon. 5} Rule made absolute in the aforesaid terms. 6} No costs. Petition disposed. (N. J. JAMADAR, J.) Vishal Parekar, PS...18