M/S Enable Technologies Pvt. Ltd vs Shankar Krishna Murthy

VALMIKI J. MEHTA, J (ORAL)

C.M. Appl. No. 25770/2018 (for exemption)

Exemption allowed, subject to just exceptions. C.Ms. stands disposed of.

RFA No. 496/2018 and C.M. Appl. No. 25769/2018 (for stay) 2. This Regular First Appeal under Section 96 of the Code of Civil Procedure, 1908

(CPC) is filed by the defendant no. 1 in the suit impugning the judgment of the trial court dated 21.2.2018 by which trial court has dismissed the leave

to defend application filed by the appellant/defendant no. 1/company under Order XXXVII Rule 3(5) CPC and has decreed the suit on the basis of

dishonoured cheque for the sum of Rs.10,92,748/- along with statutory interest at 18% per annum as per Section 80 of the Negotiable Instruments

Act, 1881 and pendete lite and future interest however only at 6% per annum. Â

The facts of the case are that the respondent/plaintiff filed the subject suit for recovery for a sum of Rs.10,92,748/- being the amount of cheque no.

545556 dated 15.4.2013 drawn on HDFC Bank, Vasant Vihar, New Delhi, and which cheque was issued by the appellant/defendant no. 1 in favour of

respondent/plaintiff towards arrears of business related expenses. Respondent/plaintiff was given two cheques, one towards arrears of salary of

Rs.29,27,022/- and the second cheque being the subject cheque towards business expenses amounting to Rs.10,92,728/-, and the suit is only for this

second cheque. Â

Trial court has rightly applied the principles of grant of leave to defend application in an Order XXXVII CPC suit in terms of the recent judgment of

the Supreme Court in the case of IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd., (2017) 1 SCC 568. Trial court has noted that the defence of the

appellant/defendant no. 1 was that the subject cheque and the letter dated 31.8.2012 are forged and fabricated, but if that was so, then why the

appellant/defendant no. 1 after becoming aware of the alleged forgery took no steps to bring the respondent/plaintiff/culprit before the law. Trial court

also rightly notes that the leave to defend application is silent as to how forgery has been done and which is specially so because the cheque bears the

signatures of the appellant/defendant no. 1, the cheque was not returned for discrepancy of signatures but only on account of insufficient funds.

 Also, if the forgery was of 2013, then the trial court rightly notes that till the filing of the suit in 2016 no action was taken by the appellant/defendant

no. 1. Trial court also rightly noted that except stating that the cheque was not issued towards any enforceable liability, there were no other details

which were given. Trial court has further rightly noted that there is a presumption that a cheque is drawn for consideration due and payable. Trial

court thereafter by applying Section 80 of the Negotiable Instruments Act, and which provides for a statutory rate of interest on a dishonoured cheque,

has granted interest at 18% per annum till filing of the suit with pendente lite and future interest at 6% per annum. The relevant paragraphs of the

impugned judgment are paragraphs 8 to 12 and these paragraphs read as under:-

“8. In IDBI  Trusteeship  Services  Ltd vs Hubtown  Ltd MANU/SC/1490/2016,  Hon'ble  Apex  Court  observed  in  para

no.18 as below:-

“18. 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:

a. 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.

b. 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,  ant  the  defendant  is ordinarily entitled to unconditional leave to defend.

c. 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.

d. 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 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.

e. 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; 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 the court.

The instant suit is based upon a cheque which is a Bill of Exchange within the meaning of Negotiable Instruments Act. In order to be entitled to

leave to defend, the defendant no. 1 must show that it has a reasonable defence which raises a triable issue. If the defence of the defendant no.1 is

moonshine and unreasonable, leave to defend cannot be granted.

The case of the defendant no.1 is that the cheque bearing no. 545556  and  letter  dated  31.08.2012  are  forged  and  fabricated

documents. However, there is nothing on record to suggest that the defendant no.1, after becoming aware of the alleged forgery, took any steps to

bring the culprit before the law. It is not specified in the application seeking leave to defend how forgery has been done. A certified copy of the

cheque in question has been filed by the plaintiff. The cheque pertains to defendant no. 1 company, signed by its authorized signatory. The cheque was

returned unpaid for the  reason  “insufficient  funds† and  not  that  signature  was  not matching or some other like reasons.

Defendant no. 1 did not take any action for the alleged forgery since 2013 when the cheque was presented for encashment and even after the filing of

the present suit. This itself suggests that the defence raised by the defendant no.1  is  without  any  basis,  unreasonable  and  moonshine.

 The conduct  of  defendant  no.1  in  not  making  any  complaint  with respect to the alleged forgery is unnatural and makes the

defence raised by the defendant no.1 inexplicable and unbelievable.

No other defence, except discussed above, has been raised by defendant no. 1. It is case of the defendant no.1 that it has no enforceable

 liability  law  towards  the  plaintiff.  However, presumption  in  case  of  the  cheque,  which  is  a  negotiable instrument,

is that it was issued towards an enforceable liability. Defendant no. 1 has not pleaded anything in the application that could explain why cheque in

question was issued, except a bald averment  regarding  absence  of  any  enforceable  liability,  which suggests  that  the  defence

 is  palpably  false,  unbelievable  and  a moonshine.

In  view  of  reasons  above,  the  application  seeking  leave  to defend  is  rejected.  The  instant  suit  is  based

 upon  dishonoured cheque. Presumption is that the cheque was issued in discharge of legal liability. As per Section 80 of Negotiable Instruments

Act, 1881, in case no rate of interest is specified, the interest to be calculated against the negotiable instrument is @18% per annum from the date at

which the same ought to have been paid by the party charged. Hence, plaintiff is also entitled to interest @ 18% per  annum  from  the  date

 of  presentation  of  the  cheque  i.e. 06.07.2013 in view of Section 80 of Negotiable Instruments Act, 1881.â€​

4(i). Learned counsel for the appellant/defendant no. 1 argued that the respondent/plaintiff on the one hand is seeking benefit of the joint letter of the

parties dated 31.8.2012 and with which the subject cheque was annexed, but now the respondent/plaintiff is recanting from the letter dated 31.8.2012

because the respondent/plaintiff has filed a suit claiming that his services were illegally terminated and which is against the jointly agreed letter/terms

dated 31.8.2012. It is argued that respondent/plaintiff cannot take up such alternative cases.

4(ii). In my opinion, this argument urged on behalf of the appellant/defendant no. 1 is misconceived because the subject suit is only filed on the basis of

a dishonored cheque, and in case the pleadings in the present case make any admission in favour of the appellant/defendant no. 1, then the

appellant/defendant no. 1 can always use that admission for getting dismissed the other suit filed by the appellant/defendant no. 1, of course in

accordance with law, however, this ground cannot be in any manner used to wish away the liability on the basis of the subject dishonoured cheque. Â

It is not disputed before this Court that the letter dated 31.8.2012 with which the subject cheque was encashed does bear the signatures of the

appellant/defendant no. 1.

Therefore, the trial court in my opinion has rightly held that there is no genuine defence and the defence is frivolous and vexatious and no triable

issue has been raised. Â

Learned counsel for the appellant/defendant no. 1 finally argued that the trial court should not have granted interest at 18% per annum, however, in

my opinion, even this argument is misconceived because when amount is claimed of a dishonoured cheque then statutorily interest has to be granted at

18% per annum in view of Section 80 of the Negotiable Instruments Act. In fact, in my opinion appellant/defendant no. 1 is lucky that

appellant/defendant no. 1 has escaped liability of rate of interest at 18% per annum for pendente lite and future period because the trial court has only

granted interest for the pendente lite and future period at 6% per annum. This argument of the appellant/defendant no. 1 is also therefore rejected.

In view of the aforesaid discussion, I do not find any merit in the appeal. Dismissed.