Jayant Nath, J
I.A.No.1253/2017
1. This application is filed by the defendant under Order 37 Rule 3(5) Civil Procedure Code seeking leave to defend.
2. The present suit is filed under Order 37 CPC as a summary suit for recovery of Rs.1,76,50,870.23/- along with interest and costs.
3. It is the case of the plaintiff as pleaded in the plaint that the defendant who is the sole proprietor of M/s Rajesh Trading is a regular costumer of the
plaintiff. It is also the case of the plaintiff that the defendant maintained a running account of the plaintiff. The plaintiff supplied goods, namely,
polyester durries and quilt covers to the defendant on various occasions. Total 26 invoices/bills were raised from 02.07.2012 to 31.07.2012. To
discharge part of the liability of the above mentioned bill/invoices, defendant from time to time issued 34 cheques from 12.09.2012 to 07.11.2012
stating that the cheques would be encashed. All the 34 cheques were presented for encashment. Total 7 cheques were duly honoured by the bankers
of the defendant and 27 cheques have been dishonoured by the banker of the defendant. Hence, the present suit is filed claiming recovery of
Rs.1,76,50,870.23/- along with interest and costs.
4. In the present application, the defendant has raised various pleas as to why leave to defend be granted. The following pleas have been raised:
i) The 27 cheques have not been issued in discharge of any liability to pay. These cheques were issued as advance cheques.
ii) On various occasions, the plaintiff company failed to deliver materials while on the other occasions the goods supplied were defective due to which
the defendant refused to receive the same. It is further pleaded that the defendant has stopped buying goods from the plaintiff company. It is also
stressed that the plaintiff company never delivered any goods except the goods for which the defendant company had already been made payment.
iii) It is further pleaded that the biltis transport receipts as filed along with the plaint do not bear the signatures of the defendant and the stamp that is
affixed to the receipts do not belong to the defendant and the same are forged and fabricated.
5. I have heard the learned counsel for the parties. The learned counsel for the parties essentially reiterated their contentions which are stated in the
pleadings.
6. Sections 118 and 139 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the ‘NI Act’) reads as follows:
“118 Presumptions as to negotiable instruments. â€"Until the contrary is proved, the following presumptions shall be made:â€
(a) of consideration â€"that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has
been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
..........
139. Presumption in favour of holder.â€"It shall be presumed, unless the contrary is proved, that the holder of a cheque received the
cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability.â€
7. In view of the above provisions, a presumption arises, unless the contrary is proved, that the holder of the cheque received the cheque in discharge
of any debt in whole or in part. The presumption is a rebuttable presumption and the onus is on the defendant to rebut the presumption.
8. The Supreme court in Krishna Janardhan Bhat v. Dattatraya G.Hegde, 2008 (4) SCC 54, considered the provisions of NI Act referring to sections
118 and 139 wherein it held as follows:
“30. The proviso appended to the said section provides for compliance with legal requirements before a complaint petition can be acted upon by a
court of law. Section 139 of the Act merely raises a presumption in regard to the second aspect of the matter. Existence of legally recoverable debt is
not a matter of presumption under Section 139 of the Act. It merely raises a presumption in favour of a holder of the cheque that the same has been
issued for discharge of any debt or other liability.
9. The Supreme Court in Kumar Exports v. Sharma Carpets, 2009 (2) SCC 513 held as follows:
12. In order to determine the question whether offence punishable under Section 138 of the Act is made out against the appellant, it will be
necessary to examine the scope and ambit of presumptions to be raised as envisaged by the provisions of Sections 118 and 139 of the Act.
In a suit to enforce a simple contract, the plaintiff has to aver in his pleading that it was made for good consideration and must substantiate
it by evidence. But to this rule, the negotiable instruments are an exception.
13. In a significant departure from the general rule applicable to contracts, Section 118 of the Act provides certain presumptions to be
raised. This section lays down some special rules of evidence relating to presumptions. The reason for these presumptions is that, negotiable
instrument passes from hand to hand on endorsement and it would make trading very difficult and negotiability of the instrument impossible,
unless certain presumptions are made. The presumption, therefore, is a matter of principle to facilitate negotiability as well as trade. Section
118 of the Act provides presumptions to be raised until the contrary is proved (i) as to consideration, (ii) as to date of instrument, (iii) as to
time of acceptance, (iv) as to time of transfer, (v) as to order of indorsements, (vi) as to appropriate stamp, and (vii) as to holder being a
holder in due course.
14. Section 139 of the Act provides that it shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque
of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.
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17. Section 118 of the Act, inter alia, directs that it shall be presumed, until the contrary is proved, that every negotiable instrument was
made or drawn for consideration. Section 139 of the Act stipulates that unless the contrary is proved, it shall be presumed, that the holder
of the cheque received the cheque, for the discharge of whole or part of any debt or liability.
10. Similarly, the Supreme Court in Rangappa v. Sri Mohan, (2010) 11 SCC 441, held as follows:
“27. Section 139 of the Act is an example of a reverse onus clause that has been included in furtherance of the legislative objective of
improving the credibility of negotiable instruments. While Section 138 of the Act specifies a strong criminal remedy in relation to the
dishonour of cheques, the rebuttable presumption under Section 139 is a device to prevent undue delay in the course of litigation. However,
it must be remembered that the offence made punishable by Section 138 can be better described as a regulatory offence since the bouncing
of a cheque is largely in the nature of a civil wrong whose impact is usually confined to the private parties involved in commercial
transactions. In such a scenario, the test of proportionality should guide the construction and interpretation of reverse onus clauses and the
defendant-accused cannot be expected to discharge an unduly high standard or proof.
28. In the absence of compelling justifications, reverse onus clauses usually impose an evidentiary burden and not a persuasive burden.
Keeping this in view, it is a settled position that when an accused has to rebut the presumption under Section 139, the standard of proof for
doing so is that of “preponderance of probabilitiesâ€. Therefore, if the accused is able to raise a probable defence which creates doubts
about the existence of a legally enforceable debt or liability, the prosecution can fail. As clarified in the citations, the accused can rely on
the materials submitted by the complainant in order to raise such a defence and it is conceivable that in some cases the accused may not
need to adduce evidence of his/her own.â€
11. Hence, the presumption arises in favour of the holder of the cheque that the same has been issued in discharge of any debt or liability. This
presumption has to be rebutted by the defendant. The defendant had to show some material to explain as to how it proposes to rebut the presumptions.
In my opinion, the defendant has completely failed to show any ground in its defence whatsoever. The defendant has raised frivolous defence and
cannot be permitted to prolong the litigation in this manner.
12. The only submission which has been made in the application for leave to defend is that some of the goods which are said to have been delivered
were not delivered to the defendant. It is further pleaded that some of the goods that were sought to be delivered by the plaintiff were defective and
hence, the defendant never accepted those goods.
13. I may note that the invoices raised are of July, 2012. The cheques were post-dated cheques which were payable from various dates from
12.09.2012 to 07.11.2012. Out of the 34 cheques which have been tendered by the defendant, 7 seven cheques have been encashed. The balance 27
cheques have been dishonoured spread over a period of almost two months. At no stage, has the defendant admittedly raised a protest to the plaintiff
pointing out that no payments were due to the plaintiff and the plaintiff is wrongly depositing the cheques for encashment. There is nothing on record
to show that the defendant at any stage raised any protest to the plaintiff that despite the plaintiff receiving the post dated cheques, the goods have not
been supplied or that defective goods have been supplied.
14. There is another aspect about alleged defective goods sent by the plaintiff. The plaintiff is said to have sent various goods and has raised 26
invoices/bills. In case, some of the goods that were sent were found to be defective, defendant would certainly raise protest and return the goods.
There is nothing on record to show that at any stage, the defendant protested that the goods were defective. The defendant has even failed to point
out that which of the goods delivered against the said 26 invoices/bills were defective and were returned . Only a vague general plea is raised that
some goods supplied were defective and were returned. The plea is bereft of any details and cannot be accepted. The plea is an afterthought.
15. I may also note another conduct of the defendant. As per the plaint, the plaintiff has sent legal notices on 14.11.2012, 16.11.2012 and 27.11.2012.
In the application for leave to defend, there is no denial that notices were received by the defendant. It becomes obvious that despite receipt of the
legal notices, the defendant had not bothered to protest pointing out that goods have not been received or defective goods have been received.
16. The next plea raised before this court is that biltis transport receipt which are filed along with the plaint, have a forged receipt and stamp of the
defendant. I may note that the plaintiff has not filed any copies of the challans showing delivery of the goods alongwith the plaint. It appears that these
challans were filed in the complaint under section 138 of the NI Act. In some of the pleadings before the criminal court where the proceedings under
Section 138 of the NI Act are pending, it appears that the defendant has taken a plea that delivery challans are not signed by the defendant and have a
forged stamp receipt of the defendant. This plea though not relevant in the present case appears to have been merely copied, though there are no
transport receipts on record here. The plea has no meaning.
17. In the context of grant of leave to defend, the principles of law applicable are well known. The basic judgment in this regard, namely, Mechelec
Engineers & Manufacturers v. Basic Equipment Corporation AIR 1977 SC 577, may be looked into for the said purpose. In para 8, the Supreme
Court has held as follows:
“In Smt. Kiranmoyee Dassi and Anr. v. Dr. J. Chatterjee 49 C.W.N. 246, Das. J., after a comprehensive review of authorities on the
subject, stated the principles applicable to cases covered by order 17 C.P.C. in the form of the following propositions (at p. 253):
(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign
judgment and the Defendant is entitled to unconditional leave to defend.
(b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good
defence the plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.
(c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not
positively and immediately make it clear that he has a defence, yet, shows such a state of facts as leads to the inference that at the trial of
the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the Defendant is entitled
to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment
into Court or furnishing security.
(d) If the Defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled
to leave to sign judgment and the Defendant is not entitled to leave to defend.
(e) If the Defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is
entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid
into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling
him to try to prove a defence.â€
In Mrs. Raj Duggal v. Ramesh Kumar Bansal, AIR 1990 SC 2218 it was held:
“3. Leave is declined where the Court is of the opinion that the grant of leave would merely enable the defendant to prolong the litigation
by raising untenable and frivolous defences. The test is to see whether the defence raises a real issue and not a sham one, in the sense that
if the facts alleged by the defendant are established there would be a good or even a plausible defence on those facts. If the Court is
satisfied about that leave must be given. If there is a triable issue in the sense that there is a fair dispute to be tried as to the meaning of a
document on which the claim is based or uncertainty as to the amount actually due or where the alleged facts are of such a nature as to
entitle the defendant to interrogate the plaintiff or to cross-examine his witnesses leave should not be denied. Where also, the defendant
shows that even on a fair probability he has a bona fide defence, he ought to have leave. Summary judgment under Order 37 should not be
granted where serious conflict as to matter of fact or where any difficulty on issues as to law arises. The Court should not reject the defence
of the defendant merely because of its inherent implausibility or its inconsistency.â€
18. In my opinion, the defendant has failed to make out any case whatsoever for grant of leave to defend. The defence raised is completely
moonshine. The application is accordingly dismissed.
CS(COMM) 614/2016
19. In view of the order passed today in I.A.No.1253/2017, I pass a decree in favour of the plaintiff and against the defendant for Rs.1,76,50,870/-.
The plaintiff shall also be entitled to simple interest @ 10% per annum from the date of decree till his recovery. The plaintiff is also entitled to cost.
The suit stands disposed of as above.
