JUDGMENT Vikramajit Sen, J.
1. By this application I propose to dispose of the present application filed by the Defendant under Order xxxvII Rule 3 of the Code of Civil Procedure, seeking leave to defend the suit. The Suit, is for the recovery of RS. 43,92,000/- (Rs. Forty three lakhs and ninety two thousand only). Briefly stated, the case in the plaint is that the Defendant had signed a cheque for a sum of Rs. 36,00,000/- (Rs. Thirty six lakhs only) which upon presentation was dishonoured with the endorsement "insufficient funds".
2. Mr. S.K. Kaul, Learned Senior Counsel appearing for the Defendant has contended that the cheque was undoubtedly given towards the settlement of dues by the Defendant. However, the terms of agreement in this respect were contained in an Agreement dated 26th August, 1996, a photo copy of which is available on the Court records. This document is not in dispute. Mr. Kaul has drawn attention to Clause 4 of this Agreement which reads as under:-
4) "That in the event of the payment of Rs. 36 Lacs (Rupees Thirty Six Lakhs only), not being made to BAGLA within the said extended period (one month calculated from 26.9.1996), all the shares of GUPTA and his group shall be transferred in the company in the name of BAGLA, his group or his nominees and thereafter GUPTA will not have any interest in the company or its assets, but GUPTA will continue to be bound for any liability incurred by the company till 26.10.1996 (being the expiry of the extended period).
For this purpose GUPTA has issued blank transfer forms for all shares belonging to him and his group in the company and the same have been handed over the BAGLA."
3. The contention is that while there is no dispute that the Cheque for Rs. 36,00,000/- was not honoured, the consequences were clearly envisaged between the parties and were mainly that the shareholding of the Defendant would stand transferred to the plaintiff. The content of Mr. Kaul is that since the value of the shares has hit rock-bottom, the plaintiff has filed the Present suit for the recovery of money. Had the shares retained the value that they commanded in August 1996, or had subsequently increased, the plaintiff would have accepted the shareholding of the Defendant with alacrity. The Agreement between them spelt out that on the dishonour of the cheque the remedy would be by way of transfer of shareholding. It is his submission that in view of the Agreement between the parties, the present suit for recovery of the value of the cheque, together with interest thereon, is not maintainable. He has relied on the judgments of the Hon'ble Supreme Court to the effect that a legitimate defense has been raised and that the Defendant is entitled to leave to defend. Since the Agreement dated 26.8.1996 is not in dispute, prima facie it appears to me that the argument is well-founded.
4. Learned Counsel for the Plaintiff, however, has drawn attention to the fact that a preliminary finding has been returned by CFSL to the effect that a letter dated 20th June, 1997 relied upon by the Defendant contains forged signatures of the plaintiff. The original of this documents has subsequently been filed because of an observation in the opinion of the CFSL that a definitive and final opinion can only be given on an inspection of the original document. However, to my mind, a consideration of the veracity and genuineness of this documents at this stage is not called for. The argument of Mr. Gopal Jain, Learned Counsel, for the plaintiff, is that the Agreement dated 26.8.1996 (Clause 4 of which is being relied upon by Learned Counsel for the Defendant), had been innovated inasmuch as a cheque for Rs. 36,00,000/- had been given on 25.4.1997. This transaction, it is Mr. Jain's submission, is not based on the Agreement and Clause 4 would, therefore, have no application whatsoever. It is his submission that there were other transactions, inter alia, for securing a Bank Guarantee, and that there was no cause or reason for the plaintiff to have executed the Letter dated 20th June 1997. However, in my understanding, even if this Letter is ignored, the Defendant would still be entitled to leave to defend. This is for the reason that if there was no linkage between issue of cheque and the Agreement on which reliance has been placed by the Defendant, this plea should at least have been pleaded in the plaint.
5. It would be trite to state that all evidence, oral or documentary is to be relied upon only if it is founded on pleadings. A perusal of the plaint shows that in the first instance a cheque of Rs. 36,00,000/- dated 25.9.1996 had been forwarded to the plaintiff by the Defendant. This cheque had been dishonoured on repeated presentation. Paragraph 10 of the plaint is significant and reads as follows:
"That when the aforesaid facts were again brought to the notice of the defendant, he had assured the plaintiff that he would pay the said amount shortly. Furthermore, in order to show his bona fide he had issued a fresh cheque bearing No. 024621 dated April 25, 1997 drawn on Banaras State Bank Limited, Ansari Road, Darya Ganj, New Delhi in lieu of and against the aforesaid dishonoured cheque. This fresh cheque was issued since the earlier cheque had become out of date. It was again assured by the defendant that the said cheque would be honoured by his bankers as and when the same is presented for encashment. It is to note that this time he had charged his bankers wherein it was represented that sufficient balance was lying therein."
6. The arguments of Learned Counsel for the plaintiff is in variance with the pleadings. It ought to have been explicitly mentioned in the above paragraph or in some other parts of the plaint that the Agreement dated 26.8.1996 had been given a go by and the parties have specifically agreed that on the issuance of the second cheque of Rs. 36,00,000/- on 25.4.1997, have a fresh agreement had emerged. It has been pleaded that it has even been agreed that the cheque was in complete settlement of the Defendant's dues against the plaintiff. The pleadings dealing with the cause of action, i.e. paragraph 16 of the plaint, also read out by Learned Counsel for the plaintiff. But I am unable Id extenal therefrom, support lor what is presently being argued before me, viz. That the second cheque for Rs. 36,00,000 dated 25.4.1997 constituted a different distinct and complete transaction on its own, such as would warrant of filing of the. present suit on this cheque alone. No such pleadings exists. It appear, prima facie, that the previous cheque had expired and that the plaintiff was still ambivalent whether to seek recovery of Rs. 36,00,000/- or to take over the shareholding of the Defendant. On my inquiry in the course of arguments, I was informed that the United India Airways Limited had gone into financial doldrums and insolvency subsequent thereto.
7. In these circumstances, I am satisfied that the Defendant has succeeded in disclosing a defense which must be permitted to be proved. It is not the plaintiffs case that on or along with the issuance of the second cheque the blank shares transferred had been returned to the Defendant, and that it was agreed between the parties that only the recovery of Rs. 36,00,000/- was to be effected. The defense is quite plausible that the plaintiff had speculated on the option of a take-over of the shares of the Defendant, and only on finding them almost worthless, fell back on the second cheque.
8. Accordingly, the application is allowed and the Defendant is permitted leave to defend the suit unconditionally. S, No. 1450/1998.
9. Renotify the matter for furl her proceedings on 13th November, 2000.