Deep Shikha @ Dolly v. Archana Jain

9. Mr. Anil Mishra, learned counsel appearing for the Appellant has submitted that the learned Trial Court erroneously decreed the Civil Suit No. 381/2019 in favour of the Respondent, without giving due opportunity to the Appellant to defend the suit. Learned Counsel for the Appellant has submitted that the above mentioned suit was instituted under Order XXXVII of the CPC based on the subject cheque which was „stale/outdated‟ which means that the validity of the cheque had lapsed. It is argued by learned Counsel for the Appellant that a cheque which had been dishonoured by the reason of it being outdated or stale, cannot give rise to a suit for recovery under Order XXXVII CPC.

10. Learned Counsel further stated that the said cheque was obtained by way of fraud from the Appellant‟s possession for which an FIR has been registered against the Respondent and her other associates. It is also submitted that there has been some material alteration in the subject cheque, which issue has been duly raised by the Appellant by way of his application seeking leave to defend before the learned Trial Court, along with other triable issues. Despite such a substantial plea, the application seeking leave to defend filed by the Appellant was dismissed by the learned Trial Court.

11. For bolstering the submissions made by him, the learned Counsel for the Appellant has relied upon the judgments in the cases of First Lucre Partnership Co. v. Abhinandan Jain, reported as 2013 SCC OnLine Del 2819; Baldev Singh v. Rare Fuel & Automobiles Technologies (P) Ltd., reported as 2005 SCC OnLine Del 406; BPDL Investments (Pvt) Ltd. v. Maple Leaf Trading International (P) Ltd, reported as 2006 SCC OnLine Del 217 SUBMISSIONS MADE ON BEHALF OF THE RESPONDENT

12. Ms. Chaitali Jain, learned counsel representing the Respondent, vehemently countered the arguments made on behalf of the Appellant by submitting that the Appellant cannot be permitted to raise any fresh plea at this stage. It is submitted that the Appellant failed to raise the issue with respect to the subject cheque being stale/outdated before the learned Trial Court. It is further submitted that there exists no averment in the Appellant‟s application seeking leave to defend with regard to the validity of the said cheque. Further, it has been submitted that such a plea has been raised for the first time before this Court, even when the litigation went on before the learned Trial Court for a considerable period of time where the Appellant was given adequate opportunity to represent her case. The Appellant is barred from taking any fresh plea under the Section 96 of the CPC which states that an appeal can be preferred only when there is a „question of law‟ emanating out of a decree in any suit.

13. Learned Counsel for the Respondent further submitted that the subject cheque was timely presented for the encashment before the bank, which is evident from the receipt issued by the ICICI Bank, Shakti Nagar, Delhi wherein date of deposit is clearly visible as 18.07.2016. Dishonour of the subject cheque is not attributable to any fault on the part of the Respondent since it was presented within the statutory period of limitation of 3 months, as prescribed by the Negotiable Instruments Act, 1881. It was rather dishonoured because of the reason that the Appellant has deliberately issued a cheque without bar code and all such chequebooks without barcode were withdrawn by the bank. Since the subject cheque was not carrying bar code, the same was dishonoured with the comment „Instrument Outdated/Stale‟.

14. Learned counsel for the Respondent has relied upon judgements in the matters of Mange Ram v. Raj Kumar Yadav, reported as 2018 SCC OnLine Del 10316; Ashwani Kumar v. Kalimuddin, reported as 2018 SCC OnLine Del 11003; IDBI Trusteeship Services Ltd. v. Hubtown Ltd., reported as 2018 SCC OnLine SC 2795.

LEGAL ANALYSIS

15. This Court has heard rival contentions of the parties and has perused all the relevant documents and judgments relied upon by the learned counsels for the parties.

16. The Respondent initiated the suit for recovery under Order XXXVII CPC against the Appellant based on the subject cheque. The said cheque was returned unpaid by the bank with an endorsement „instrument outdated/stale‟. It is the contention of the Appellant that summary suit is not maintainable based on a stale cheque. It is thus important to examine the law regarding summary suits based on stale cheques.

17. The Hon‟ble Division Bench of this Court in Baldev Singh v. Rare Fuel & Automobiles Technologies (P) Ltd., reported as 2005 SCC OnLine Del 406 examined an identical issue and inter alia, held as follows:

18. Learned Single Judge of this Court in BPDL Investments (Pvt) Ltd. v. Maple Leaf Trading International (P) Ltd reported as 2006 SCC OnLine Del 217 followed the same view and reiterated that the cheques which were not presented for encashment during the validity period could not form basis of a suit under Order XXXVII CPC and the suit has to be tried as an ordinary suit.

19. Another learned Single Judge of this Court in First Lucre Partnership Co. v. Abhinandan Jain, reported as 2013 SCC OnLine Del 2819 even though followed the same principle, opined that the said view requires reconsideration. The relevant portion of the said Judgment, reads as follows:

20. It is pertinent to mention that in Lucre Partnership Co. (Supra), the defendant‟s case was not solely based on the stale cheque. In the said case, the stale cheques were supported with a written contract which clearly establishes the existence of a valid debt between the parties and the stale cheques were issued with an intention to clear the outstanding debt. Hence, the learned Single Judge rejected the application seeking leave to defend filed by the defendant therein. The said Judgment was challenged before this Court in RFA (OS) 50/2014, however, the said Appeal was disposed of by way of a compromise decree.

21. In view of the case laws discussed herein above, the legal position that emerges is that the summary suits cannot be decreed solely based on the stale cheques. However, if it is supported with other evidences, especially, written acknowledgments/promissory notes etc., the same may be decreed.

22. Based on these legal principles, this Court now proceeds to examine the facts of the present case.

23. In the present case, it is the case of the Respondent that she advanced a friendly loan of Rs.53,50,000/- to the Appellant in the month of December 2015. It is the case of the Appellant that she never took any such loan from the Respondent. Thus, the factum of advancement of loan itself is a disputed question of fact. There is no written contact/promissory note to establish the existence of a valid debt between the parties. The Respondent in the proceedings under Section 138 of the Negotiable Instruments Act, 1881 disclosed that she is taking tuitions for children. In the present case, the Respondent stated that she took loans from various sources to arrange Rs.53,50,000/- to advance the said friendly loan to the Appellant. The capacity of the Respondent to advance such a huge loan itself is a matter of trial, to be established based on the evidence.

24. It is further the case of the Respondent that in order to secure the said friendly loan, the Appellant issued the subject cheque. It is to be noted that the friendly loan was advanced in the month of December 2015, however, the subject cheque was dated 22.04.2016. There is no explanation provided as to why the Respondent advanced such a huge amount of loan to the Appellant without any security. The circumstances under which the subject cheque was issued after 4 months, i.e., April 2016 is also not explained in the plaint. In order to establish all these facts, evidence needs to be led.

25. The bank returned the said cheque undelivered on 26.07.2016 with an endorsement „instrument outdated/Stale‟. It is the case of the Respondent that she submitted the subject cheque for encashment on 18.07.2016, however, it was dishonoured because of the reason that the Appellant has deliberately issued a cheque without bar code and all such chequebooks without barcode were withdrawn by the bank. Since the subject cheque was not carrying bar code, the same was dishonoured with the comment „Instrument outdated/stale‟. Even to prove the said fact, evidence is required to be led.

26. It is the case of the Respondent that the Appellant never took objection qua the staleness of the subject cheque or nonmaintainability of the suit on basis of stale cheque in her application seeking leave to defend. It is the case of the Respondent in the Plaint itself that the subject cheque was returned by the bank with a remark „outdated instrument /stale‟. Hence the factum of return of the cheque on the ground of „outdated instrument/stale‟ was there before the learned Trial Court. Whether a summary suit is to be entertained or not on the basis of a stale cheque is a legal issue which can be taken up at any stage of the proceedings. This Court in Baldev Singh (Supra) also had encountered with an identical plea and rejected the same, inter alia, observing as follows: “6. Before concluding we may mention that the plea dealt with by us above was not specifically raised in the application for leave to defend. It was raised before us during arguments and since the plea involved a question of law we heard learned counsel for the parties on the point in question.

27. Vide the Impugned judgment, the learned Trial Court observed that the Appellant failed to come up with any explanation as to the issuance of the subject cheque to the Respondent, which bears his name and signature. The learned Trial Court further noted that the Appellant did not deny the fact that the subject cheque carried his signature which was issued for the repayment of the loan availed from the Respondent. Hence, the learned Trial Court was of the view that the Appellant failed to set up his defence and therefore dismissed the Appellant‟s application seeking leave to defend under Order XXXVII Rule 3 CPC. However, the learned Trial Court failed to appreciate the basic fact that the subject cheque was returned by the Bank with a remark „Instrument outdated/stale‟. Learned Trial Court ought to have appreciated the fact that the subject cheque is not supported with any further evidence such as written instruments/promissory notes etc. In view of the law laid down by the Division Bench of this Court in Baldev Singh (Supra), it is evident that the suits cannot be summarily decreed on the basis of stale cheques.

28. The Hon‟ble Supreme Court in IDBI Trusteeship Services Ltd Vs Hubtown Ltd reported as 2017 (1) SCC 568 laid down the principles to be adopted while dealing with suits under Order XXXVII CPC. The relevant portion, reads, inter alia, reads as follows: “17. Accordingly, the principles stated in paragraph 8 of Mechelec’s case will now stand superseded, given the amendment of O.XXXVII R.3, and the binding decision of four judges in Milkhiram’s 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 defendant is entitled to unconditional leave to defend the suit; 17.[2] if the defendant raises triable issues indicating 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; 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.”

29. In view of the detailed discussions herein above, this Court is of considered view that the present case falls within the situation as envisaged by the Hon‟ble Supreme Court in paragraph 17.[4] of IDBI Trsuteeship (Supra). Hence, the Appellant is entitled to conditional leave as envisaged therein. The Impugned Judgment is set aside and this Court grants leave to the Appellant to contest the present suit subject to deposit of Rs.15 Lakhs with the learned Trial Court within a period of 4 weeks. The parties are directed to appear before the learned Trial Court on 03.07.2023.

30. The present Appeal is allowed and all the pending applications are disposed of. No order as to costs.

GAURANG KANTH, J. JUNE 02, 2023