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ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL SUMMARY SUIT NO. 45 OF 2022
Suneel Dattatraya Mogre
Age – 71 years, Advocate, Indian
Inhabitant Residing at Bhagirathi Prasad, 99 Ranade Road, Shivaji Park, Dadar, Mumbai – 400 028
Email: suneelmogre@gmail.com
Mobile No. 9320602899 …...Plaintiff
Vs.
Prabhakar Baburao Thorat
Sole Proprietor, Sai Venkata Buildwell
Age – 61 years, Indian Inhabitant
Residing at Saipushpa 24/280, Pradhikaran, Nigdi, Pune – 411 044
Email: saivenkata@hotmail.com
Mobile No. 9822252456 …...Defendant
JUDGMENT
IN
COMMERCIAL SUMMARY SUIT NO. 45 OF 2022
Suneel Dattatraya Mogre
Age – 71 years, Advocate, Indian
Inhabitant Residing at Bhagirathi Prasad,
99 Ranade Road, Shivaji Park, Dadar, Mumbai – 400 028
SHUBHAM PRAVINRAO
Email: suneelmogre@gmail.com Mobile No. 9320602899 …...Plaintiff Vs. Prabhakar Baburao Thorat Sole Proprietor, Sai Venkata Buildwell Age – 61 years, Indian Inhabitant Residing at Saipushpa 24/280, Pradhikaran, Nigdi, Pune – 411 044 Email: saivenkata@hotmail.com Mobile No. 9822252456 …...Defendant ---------------- Mr. Suneel D. Mogre, Plaintiff in person is present. Mr. Rohan Savant a/w Akansha Saxena i/by Sanjay Gawde for Defendant. ----------------- CORAM : ARIF S. DOCTOR, J. RESERVED ON : 24th APRIL, 2023 PRONOUNCED ON : 23rd JUNE, 2023
1. The Plaintiff has filed the captioned Summary Suit for a decree for the sum of Rs.2,25,00,000/- based on a dishonoured cheque bearing No.292136 dated 3rd February 2021, drawn on TJSB Sahakari Bank Ltd. (the said cheque).
2. The facts set out in the Plaint are as follows: i. The Plaintiff and the Defendant are both Advocates who met each other through a common acquaintance. The Defendant, it is stated, carries on the business of the land development, construction and real estate in the name and style of a sole proprietorship concern known as M/s. Sai Venkata Buildwell. It is stated that between the years 2006 to 2012, the Plaintiff had some dealings with the Defendant in respect of purchase of certain properties. ii. It is stated that on 3rd February 2021, the Defendant issued to the Plaintiff the said cheque for valuable consideration. iii. On 27th April 2021, the Plaintiff deposited the said cheque with the Saraswat Co-operative Bank Ltd., Mazgaon, Mumbai branch for realization. At the time of deposit, it was noticed that the amount mentioned in figures on the said cheque was Rs.2,25,000/- instead of Rs.2,25,00,000/-. The amount in words was however correctly stated, however, crore was misspelt as ‘caror’. iv. On 4th May, 2021, the Plaintiff received notice of dishonour from the bank. The reason for dishonour was stated as “55- Account blocked (situation covered in 21-25)”. v. It was in these circumstances that the Plaintiff issued a statutory notice dated 19th May, 2021 under Section 138(b) of the Negotiable Instruments Act, 1881 calling upon the Plaintiff to make payment of the said sum within 15 days. The Defendant vide his Advocate’s letter dated 27th May, 2021 responded to the statutory notice inter alia contending that the Plaintiff had never entered into any transaction with the Defendant nor had the Defendant issued any cheque towards discharge of any liability. The Plaintiff’s Advocate on 11th June, 2021 responded to the Defendant’s Advocate’s notice dated 27th May, 2021 essentially denying the contention raised therein and reiterating the stand taken in the Advocate’s Notice dated 27th May, 2021. vi. It is in the aforesaid circumstances that the Plaintiff has filed the present Summary Suit seeking a decree for the sum of Rs.2,25,00,000/- based on the dishonour of the said cheque. Submissions of Mr. Mogre, Plaintiff in person.
3. Mr. Mogre, at the very outset submitted that the Defendant had admitted his signature on the said cheque and had thus accepted his liability in respect of the same. He therefore submitted that the presumption under Section 139 of the Negotiable Instruments Act would squarely apply to the facts of the present case. In support of his contention, he placed reliance upon judgment of the Hon’ble Supreme Court in the case of Rangappa Vs. Sri Mohan[1], in which, the Hon’ble Supreme Court held viz., “13.The High Court in its order noted that in the course of the trial proceedings, the accused had admitted that the signature on the impugned cheque (No. 0886322 dated 8-2-2001) was indeed his own. Once this fact has been acknowledged, Section
139 of the Act mandates a presumption that the cheque pertained to a legally enforceable debt or liability. This presumption is of a rebuttal nature and the onus is then o the accused to raise a probate defence. With regard to the present facts, the High Court found that the defence raised by the accused was not probate.”
4. Mr. Mogre thus submitted that the Defendant could not now dispute his liability to make payment to the Plaintiff in terms of the said cheque after having expressly admitted that he had duly signed the same. Learned counsel also submitted that the fact that there was a discrepancy in the amount mentioned in figures and words on the said cheque was of no consequence given the provisions of Section 18 of the Negotiable Instruments Act, which provides as follows viz.
Mr. Mogre submitted that it was only in an attempt to resile from his liability under the said cheque that the Defendant had raised various false, frivolous and untenable contentions.
5. Mr. Mogre then submitted that since the Plaint was based on the dishonour of a cheque, there was neither need nor necessity to mention the consideration in respect of which the said cheque was issued. He submitted that once payment was made by cheque for discharge of a loan, even if the consideration was advanced in cash, the liability under the loan is substituted by the liability to honour the cheque. He submitted that in fact the original liability to pay the said loan gets discharged by means of execution of a cheque and if such cheque is not honoured, it gives rise to a distinct cause of action under the provisions of the Negotiable Instruments Act. In support of his contention, he placed reliance upon judgments in the case of Parikh Aluminex Limited vs M/s. Ashok Commercial Enterprises and Another[2] and Mour Marbles Industries Private Limited vs Motilal, Laxmichand, Shalech HUF[3]. He therefore submitted that the Defendant’s contention that the Plaintiff was a moneylender or that amounts had been advanced in cash were both wholly immaterial once a cheque had been issued by the Defendant for repayment of a loan advanced in cash.
6. Mr. Mogre then submitted that once repayment of an amount advanced in cash was sought to be made by cheque, the same gets accounted for and thus the fact that the same was advanced in cash is wholly immaterial. In support of his contention learned counsel placed reliance upon a judgment of this Court in the case of Dr. Jagannath Ganesh Hegde Vs. M/s. In Depth Entertaining Arts Pvt. Ltd. & Ors.4, in which, this Court was pleased to observe as follows viz.: - “Unless the courts start discouraging flimsy defences. acceptability of cheques would not increase. The problem of unaccounted money would be reduced if transactions take place by cheque. Even a cash advance when repaid by cheque gests accounted. Making it unrecoverable, would only push the persons to extra judicial methods of recovery. The courts would thus not only be defeating the object of the provision but also Indirectly be party to increase lawlessness. This, in my humble view, cannot be allowed by courts.”
7. Similarly, Mr. Mogre submitted that once a cheque drawn for the discharge of a debt, the same becomes enforceable as a contract even if the underlying debt is time barred and/or otherwise not recoverable. In support of his contention, learned counsel placed reliance upon a judgment 4 2016 SCC OnLine 10400 of this Court in the case of M. Shantilal & Co. Vs. Abbaji Maruti Jadhav and Another[5], in which, this Court held as follows. “11. In the circumstances, once cheque is drawn for discharge of a time barred debt, it creates a promise which becomes an enforceable contract and therefore, it cannot be said that the cheque is drawn in discharge of debt or liability which is not legally enforceable. Therefore, I am satisfied that the impugned judgment dated 16.9.1998 has to be set aside and is hereby set aside. The matter is remanded to the trial Court to decide, based on the evidence already recorded, whether the complainant has proved the ingredients of offence punishable under Section 138 of the
8. Basis the above, learned counsel submitted that in the facts of the present case, the Defendant having admitted to signing the said cheque could not now deny his liability to make payment of the amount in respect of which the same had been drawn. He reiterated that the presumption in law under Section 139 of the Negotiable Instruments Act would squarely apply and therefore it was not open for the Defendant to now contend that (i) no consideration had passed from the Plaintiff to the Defendant or (ii) that the same was not properly set out/explained in the Plaint and (iii) that the Plaintiff was a money lender or that amount had been advanced in cash. He therefore submitted that the Summons for Judgment must necessarily be made absolute as prayed for. Submissions of Mr. Savant on behalf of the Defendant.
9. At the outset Mr. Savant, pointed out that there was no privity between the Plaintiff and Defendant since the Plaintiff had never advanced any monies to the Defendant. He pointed out that even the Plaint was silent as to the details of the consideration based on which the said cheque was allegedly advanced. He pointed out that the Plaint was totally silent as to when and where the said consideration had been given.
10. Learned counsel then submitted that the Defendant was entitled to unconditional leave to defend the present Suit on account of the gross suppression on the part of the Plaintiff. In support of his contention, he invited my attention to the Plaintiff’s notice dated 8th April, 2021 and submitted that though the same was annexed to the Plaint, there was absolutely no mention much less explanation or reference to the same in the body of the Plaint. Learned counsel then invited my attention to the said letter dated 8th April, 2021 and pointed out therefrom (i) that there was no mention or proof of any disbursal of any amount by the Plaintiff to the Defendant, (ii) that the amount of Rs.2,25,00,000/- remained completely unexplained both in terms of when and how the said liability arose and also as to its quantification and (iii) that the letter reflected that initially i.e. in the year 2014, the Defendant had issued a cheque of Rs.1,50,00,000/- in the name of the Plaintiff’s son and subsequently in the year 2016, the Defendant had issued a cheque of Rs.1,95,00,000/- in the name of the Plaintiff and again in the year 2017 and 2021, the Defendant had issued two cheques in the name of the Plaintiff, but the amount had increased to Rs.2,25,00,000/-. He submitted that the Plaint was also entirely silent as all these details which remained unexplained by the Plaintiff. He submitted that the Plaintiff was silent on all these relevant aspects since infact there was no amount due and payable to the Plaintiff who had never lent money to the Defendant but who had infact misused security cheques given to him by the Defendant for due repayment of loans advanced by others, which loans had all been duly repaid. He thus submitted that the Defendant was entitled to unconditional leave to defend the Suit.
11. Learned counsel then once again invited my attention to the letter dated 8th April, 2021 and pointed out that the Plaintiff had in the year 2016 showed an amount of Rs. 1,95,00,000/- as being due and payable by the Defendant to the Plaintiff. He then pointed out that the Plaintiff had stated that the Plaintiff had thereafter made certain payments on behalf of the Defendant, after which, the amount of the cheque stood increased to Rs.2,25,00,000/-. He submitted that the Plaintiff was seeking to recover these amounts from the Defendant (a) without there being proof that the Plaintiff had in fact made such payment and (b) had done so pursuant to agreement/understanding that the Defendant would reimburse the Plaintiff for the same. He submitted that it was thus clear that the Plaintiff had filled in the said cheque and was seeking to recover sums purportedly paid by the Plaintiff to third parties on behalf of the Defendant absent any agreement or instruction from the Defendant. He submitted that on this ground alone, the Defendant was entitled to leave to defend the present Suit.
12. Learned counsel then submitted that it was well settled that a party cannot determine what is material and what is not. He submitted that a litigant must come up-front with all the material facts pertaining to its claim. In support of his contention, he placed reliance upon a judgment of the Hon’ble Supreme Court in the case of Bhaskar Laxman Jadhav and Ors. Vs. Karamveer Kakasaheb Wagh Education Society and Anr.6. He submitted that the letter dated 8th April, 2021 was a material letter and it was therefore essential for the Plaintiff to have dealt with and explain what was stated therein in the Plaint. He submitted that suppression of a material fact amounted to fraud on the Court and would by itself disentitle a party to any relief. In support of his contention, he placed reliance upon the judgment of the Hon’ble Supreme Court in the case of S. P. Chengalvaraya Naidu Vs. Jagannath[7] and submitted that the Plaintiff having suppressed the true and correct facts of the case in the Plaint had disentitled himself to any relief.
13. Learned counsel then submitted that the Plaintiff’s case that the Defendant had filled up the said cheque and had inadvertently filled up in the amount in figures incorrectly was patently false. In support of his contention, he pointed out that both the spelling and handwriting appearing on the said cheque were same as that on the deposit slips thus making it apparent that the Defendant could never have filled in the said cheque. He then pointed out that the Plaintiff had in cross-examination stated that the deposit slip was filled in by the Plaintiff’s clerk on his instructions. He therefore submitted that it was plain that it was the Plaintiff and/or his clerk who had filled in both the cheque as well as deposit slip. He then submitted that the Plaintiff’s explanation qua the said deposit slip also begged disbelief since had the Plaintiff indeed deposited the said cheque on 27th April, 2021 as claimed, the presentation thereof on 23rd May, 2021 was patently delayed and nor as per standard banking norms.
14. Learned counsel then invited my attention to paragraph No.4 of the letter dated 11th June, 2021 and pointed out that it was the Plaintiff’s case therein that the three cheques i.e. (i) cheque dated 23rd January, 2016,
(ii) cheque dated 14th January, 2017 and (iii ) the said cheque were issued by the Defendant in favour of the Plaintiff. He submitted that it was the Plaintiff’s case that the said cheque was issued in lieu of cheque dated 14th January, 2017 and therefore on the Plaintiff’s own showing, the Plaintiff had retained all the said cheques. Learned counsel then once again placed reliance upon the Plaintiff’s cross-examination, wherein, the Plaintiff had admitted that the cheque dated 23rd January, 2016 and the cheque dated 14th January, 2017 were issued by the Defendant to the Plaintiff as security. Basis this, he submitted that since the subject cheque had only been issued as and by way of security and the Plaintiff could therefore not have deposited the same.
15. Learned counsel then submitted that the Plaintiff had in fact never advanced money to the Defendant and that all the individuals who had advanced money to the Defendant had already received repayment of their entire principal amount.
16. Then dealing with the order dated 20th April, 2022, passed by the Sessions Court under Section 397 of the Code of Criminal Procedure, 1973, which directed the Defendant to make a deposit, he pointed out that the same was only an interim order and no final adjudication of liability of conviction of the Defendant had been undertaken. He without prejudice submitted that this, being an interim order, would not in any event bind this Court.
17. Learned counsel then submitted that it was well settled that the presumption under Section 139 of the Negotiable Instruments Act was a rebuttable presumption and thus when determining whether the presumption has been rebutted, the test of proportionality must guide such determination. He submitted that the standard of proof for rebuttal of the presumption under Section 139 of the Negotiable Instruments Act was guided by the preponderance of probabilities. In support of his contention, he placed reliance upon a judgment of the Hon’ble Supreme Court in the case of ANSS Rajashekar Vs. Augustus Jeba Ananth[8]. Placing reliance upon the said judgment, he submitted that the Defendant had raised a bonafide defence, which created a doubt about the existence of legally enforceable debt or liability and thus the presumption under Section 139 of the
Negotiable Instruments Act stood rebutted. Learned counsel thus submitted that it was clear that the Plaintiff’s case was a false one and that the cheques were filled in by the Defendant and had been furnished by the Defendant only as security and were now being misused by the Plaintiff.
18. He then submitted that the Plaintiff was engaged in the business of money lending and therefore unconditional leave to defend the Suit must necessarily be granted to the Defendant. In support of his contention that the Plaintiff was in the business of money lending, he placed reliance upon the cross-examination of the Plaintiff conducted in the proceedings under Section 138 of the Negotiable Instruments Act, wherein, the Plaintiff had admitted in his cross-examination that he advanced monies in cash and had not disclosed the same to the authorities. Learned counsel further submitted that it was the Plaintiff’s case that he had paid the sum of Rs.1,50,00,000/- to the Defendant in cash, however, no proof whatsoever regarding this payment was produced by the Plaintiff. He thus submitted that this demonstrated that the Plaintiff was accustomed to dealing in high volumes of cash. He then pointed out that the volume of transactions undertaken by the Plaintiff and the Plaintiff’s associates were evident from the letter dated 8th April, 2021. A plain reading whereof would make evident that the Plaintiff was involved in the business of money lending. Learned counsel took pains to point out that the defence of money lending had been taken by the Defendant in his letter dated 3rd May, 2021 as well as in the Affidavit-in-Reply, however, despite this there was no denial to the said contention much less any explanation in respect of the same.
19. Learned counsel then without prejudice to the aforesaid, submitted that the present Suit had been filed under the provisions of the Commercial Courts Act. He pointed out that the definition of commercial dispute as appearing in Section 2(c)(i) is as follows; “2(c)(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;” Basis the above, he submitted that by virtue of the said definition itself the Plaintiff was a financier and thus someone who commercially lent money, i.e. a money lender. He therefore submitted that the said loan transaction could only be defined as being a commercial dealing between the parties and thus had the flavour of money lending. He therefore submitted that unconditional leave was required to be granted to the Defendant. In support of his contention, he placed reliance upon the judgments in the case of Sha Damji Deraj Vs. Megraj Bhikumchand and Co.[9] and Yellava Nagappa Kunchikorve Vs. Kantabi Malli10.
20. In conclusion, learned counsel submitted that the Plaintiff’s claims of having advanced monies in cash which was disputed by the Defendant were therefore not covered by the judgments relied upon by the Plaintiff. He submitted that these judgments pertain only to cases where the receipt of the amount had not been disputed. He submitted that Courts have repeatedly frowned upon litigants who had sought recourse to justice through Courts based on transactions in breach of the statutory provisions and tax laws. In support of his contention, he placed reliance upon a judgment of the Delhi High Court in the case of New Era Impex (India) Pvt. Ltd. Vs. Oriole Exports Pvt. Ltd.11.
21. For all of the aforesaid reasons, learned counsel submitted that in the matter several triable issues would arise and therefore the interest of justice would require that unconditional leave to defend the Suit be granted to the Defendant since the Defendant has raised substantial defences and was likely to succeed at the trial of the Suit. In support of his contention, he placed reliance upon a judgment of the Hon’ble Supreme Court in the case of BL Kashyap and Sons Vs. JMS Steels and Power Corp. and Anr.12. Reasons and conclusion.
22. I have heard learned counsel, perused a copy of the pleadings as also considered the case law cited and find that in the facts of the present case, the Defendant is not entitled to unconditional leave to defend, for the following reasons, viz., i. At the outset, the Defendant has admitted to both, having executed the said cheque and handing over the same to the Plaintiff. There is not even a hint of a suggestion that the Defendant did not do so voluntarily or was forced and/or coerced into handing over the said cheques. Thus, even accepting the Defendant’s contention that a blank cheque was handed over to the Plaintiff, it is well settled as has been held by the Hon’ble Supreme Court in the case of Bir Singh vs Mukesh Kumar13 that the presumption under section 139 of the Negotiable Instruments Act squarely applies. There is no doubt that the presumption under Section 139 of the Negotiable Instruments Act is a rebuttable presumption but in the facts of the present case, the factum of the Defendant undisputedly executing and handing over the said cheque to the Plaintiff is enough to prime facie conclude that the initial burden has, in the facts of this case, been discharged. ii. While, the Defendant has pleaded that the Plaintiff did not advance any loan to the Defendant and thus there was no consideration for the said cheque, a careful reading of the correspondence indicates to the contrary. The Defendant has, in correspondence infact stated that the Plaintiff had forced the
Defendant to take money on heavy interest which was beyond the capacity of the Defendant. This fact clearly therefore prima facie militates against the Defendant’s contention that there were no dealings between the Plaintiff and the Defendant or that the Defendant had not received any consideration from the Plaintiff. Additionally, it is completely unintelligible as to how a party can force another to take money on heavy interest and against one’s own free will. Indeed, if this was the case, it was incumbent upon the Defendant to have set out adequate details in the Affidavit-in-Reply. The Affidavit-in-Reply is however completely bereft of any such details. iii. Additionally, while it is the Defendant’s contention that he had handed over 30 cheques to the Plaintiff towards security for due repayment of the loans advanced by other individuals/entities, the Defendant has (a) not set out any details of the said 30 cheques and (b) not demanded the return thereof in writing despite claiming that the loans, in respect of which they were given as security, were repaid. This fact also prima facie militates against the contention that 30 cheques were infact given as security. iv. The Defendant’s contention that the Plaintiff carries on the business of money lending is ex facie untenable given the fact that the Defendant has expressly pleaded that the Plaintiff had never advanced any monies to the Defendant. Therefore, for the Defendant to contend on the one hand that the Plaintiff is a money lender and yet to contend on the other that the Plaintiff had never lent money to the Defendant in my view is an ex facie contrary and self-defeating stand taken by the Defendant. v. Equally untenable is the Defendant’s contention that the fact that since the present Suit has been filed under the provisions of the Commercial Courts Act, the Plaintiff is a financier. The present Suit is filed based on a dishonoured cheque and is not for a recovery of a loan. The ratio in the judgments in the case of Parikh Aluminex Limited (supra) and Mour Marbles Industries Private Limited thus squarely apply. Therefore, the Defendant’s contention that the Plaintiff is a financier as defined under Section 2(c)(i) of the Commercial Courts Act and thus is deemed to be a money lender is entirely untenable.
23. Given the above, I find that the Defendant having voluntarily handed over the said cheque duly signed, even assuming the same was blank would necessarily be liable in respect thereof. There is no doubt that the practice of handing over blank cheques is one which is attended with risks. As already observed above, the law is well settled that the presumption under Section 139 of the Negotiable Instruments Act would apply. Therefore, when a person voluntarily hands over a blank cheque he therefore accepts the risks of the consequences that may follow in doing so. The handing over of a blank cheque also presupposes (a) that the same was handed over for consideration and/or some benefit having been or to be received by the drawer and (b) the existence of a high level of faith and trust between the Parties. The Defendant therefore cannot be permitted to now raise defences that were not expressly taken at the time of the handing over of the said cheque, namely that the same was handed over only as security etc. Had this been the case, it was incumbent for the Defendant to have made this clear in writing at the time the cheque was handed over. Presumably the Defendant did not do so as monies were being lent and accepted in cash as is the case of the Plaintiff.
24. Now coming to the reasons why in the facts of the present case I am inclined to grant the Defendant conditional leave to defend for the following reasons, viz., i. While there is no doubt that the presumption under Section 139 of the Negotiable Instruments Act in this case arises, it is well settled that the same is a rebuttable presumption. ii. Additionally, for the reasons indicated above, while I have no doubt that there were dealings between the Plaintiff and the Defendant, one aspect on which I found merit in the argument of the Defendant was that the Plaint was bereft of the necessary details for the Plaintiff to be entitled to a decree. The Plaint is silent on when and how the consideration passed. It is now clear that the same was in cash and that by itself is not an impediment given the judgments of this Court in the case of Dr. Jagannath Ganesh Hegde (supra) and M. Shantilal & Co. (supra). However, there was merit in the contention of the learned counsel for the Defendant that the Plaintiff’s letter dated 8th April, 2021 was completely unexplained in the Plaint. There is not a whisper of (a) when and how the consideration for the cheque dated 23rd January, 2016 for Rs.1,95,00,000/had passed and (b) the reasons for which the amount subsequently increased to Rs.2,25,00,000/-. It prima facie appears that the Plaintiff had added the amounts to the amount of Rs.1,95,00,000/- stated to be owing to the Plaintiff in the year 2016. Given this, it was incumbent upon the Plaintiff to have shown (a) that this was infact done and (b) this was with the concurrence of the Defendant. I find that there is not even an attempt on the part of the Plaintiff to do so.
25. Hence, the following order:- O R D E R i. Leave to defend the present Suit is granted to the Defendant subject to depositing a sum of Rs.50,00,000/- within a period of six weeks from today. ii. If the aforesaid deposit is made within the stipulated period, this Suit shall be transferred to the list of Commercial Causes and the Defendant shall file written statement within a period of six weeks from the date of deposit. iii. If this conditional order of deposit is not complied with, within the aforesaid period, the Plaintiff shall be entitled to apply for an ex-parte decree against the Defendant after obtaining a non-deposit certificate from the Prothonotary and Senior Master of this Court. iv. Summons for Judgment stands disposed of in the aforesaid terms. v. In view of the above order, Interim Application, if any, does not survive and is disposed of accordingly. (ARIF S. DOCTOR J.)