Sacha Finance And Developers Co vs Jayant Bhavanji Soni And Anr
2022 Latest Caselaw 11314 Bom

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             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                ORDINARY ORIGINAL CIVIL JURISDICTION

             SUMMONS FOR JUDGMENT NO.24 OF 2021
                            IN
          COMMERCIAL SUMMARY SUIT (L) NO.10938 OF 2021

Sacha Finance and Developers Co.                      ...Plaintiff
          vs.
Jayant Bhavanji Soni (since deceased)
Through Legal Heirs and Anr.                          ...Defendants

Ms. Sunanda Kumbhat, for the Plaintiff
Mr. Anuj Narula i/b. M/s. Jhangiani Narula and Associates, for the
Defendants.

                           CORAM :         N.J. JAMADAR, J.
                      RESERVED ON :        JULY 28, 2022
                    PRONOUNCED ON :        NOVEMBER 9, 2022
                                -------------

JUDGMENT:

1. This Commercial Division Summary Suit is instituted for

recovery of a sum of Rs. 1,10,15,890/- along with further interest @

18% p.a. on the sum of Rs. 1 Crore, being the amount covered by the

dishonoured cheques on which the suit is instituted.

2. The material averments in the plaint can be stated in brief as

under:-

The plaintiff is a partnership firm registered under the

Partnership Act, 1932. Jayant Soni (the deceased defendant No. 1)

was the sole proprietor of Joy Builders. Defendant No. 2 Bhavin is

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the son of deceased defendant No. 1 and the authorized

representative / mandate holder of Joy Builders. Post demise of

defendant No. 1, defendant No. 1A to 1C have been impleaded as the

legal representatives of deceased defendant No. 1 apart from

defendant No. 2.

3. The deceased defendant No. 1 and defendant No. 2 had

approached the plaintiff to advance money to finance their then on-

going projects of real estate development. The defendants had

assured to repay the loan amount along with interest @ 12% p.a. and

one time compensation. Pursuant to the representations of the

deceased defendant No. 1, and defendant No. 2, the plaintiff had paid

a sum of Rs. 50 lakhs to the defendants by a cheque bearing No.

467423 payable on 18th July, 2014, against a post dated cheque

drawn by the defendants for the said amount and also a bill of

exchange drawn by defendant No. 2 and accepted by Joy Builders.

Initially, the defendant Nos. 1 and 2 paid interest at the agreed rate

of 12% p.a. A further sum of Rs. 15 lakhs was advanced by the

plaintiff to the defendant by a cheque bearing No. 000216 payable

on 1st October, 2015. Thereupon, the defendants took back the post

dated cheque drawn for Rs. 50 lakhs at the time of availing the first

tranche of loan and issued another post dated cheque for an amount

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of Rs. 65 lakhs. In addition a promissory note for a sum of Rs. 15

lakhs was also issued in favour of the plaintiff.

4. As the defendants committed default in repayment,

negotiations were held between the plaintiff and defendant Nos. 1

and 2 in the presence of Mr. Lakhi Batra, the go-between. The

defendants agreed to pay interest @ 15% p.a instead of 12% p.a. and

replace the post dated cheques. The defendants did pay quarterly

interest @ 15% p.a from April, 2017 to June, 2019 and also replaced

the cheques drawn towards the repayment of the principal amount.

Upon being called upon to repay the principal amount and the

interest accrued thereon and compensation, as agreed, the

defendants had issued two cheques bearing NO. 738578, for the sum

of Rs. 65 lakhs, and No. 217657, for the sum of Rs. 30 lakhs, payable

on 21st December, 2019 towards the principal amount and the

compensation. Both the cheques were, however, returned un-

encashed on presentment.

5. Upon being approached, the defendants issued a fresh cheque

bearing No. 739393 for an amount of Rs. 65 lakhs payable on 10 th

July, 2020. The defendants had also delivered 8 cheques for various

amounts along with letter dated 7th March, 2020. The validity

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period of first two cheques expired. After a rigorous follow up, the

defendants agreed to repay the principal amount along with

compensation of Rs. 30 lakhs and an additional sum of Rs. 5 lakhs

towards interest for the delayed period. The defendants thus issued

cheque Nos. 009741, 009742 for an amount of Rs. 30 lakhs and 5

lakhs respectively on Kotak Mahindra Bank. When the plaintiff

presented the cheque drawn for Rs. 65 lakhs towards principal

amount and the aforesaid cheques drawn towards compensation

and interest, all the three cheques were dishonored. Hence, the

plaintiff addressed demand notice under section 138 of Negotiable

Instruments Act, 1881. Despite service of the notice, the defendants

neither paid the amount nor gave reply. Hence, the plaintiff was

constrained to institute this suit.

6. Initially defendant Nos. 1 and 2 entered appearance.

Thereupon, the plaintiff took out the Summons for Judgment.

7. An affidavit in reply is filed by defendant No. 1A to 1C and

defendant No. 2 seeking an unconditional leave to defend the suit. At

the outset, the defendants contend that under the will of the

deceased defendant No. 1 dated 28th May, 2021, the defendant No. 2

is the universal legatee. The defendant No. 1A to 1C have executed a

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declaration accepting the will executed in favour of defendant No. 2.

Therefore, the suit against defendant No. 1A to 1C is misconceived.

8. The defendants contend that the plaintiff is not entitled to a

decree as the plaintiff has been dealing in the business of illegal

money lending. Thus, the bar under section 13 of the Bombay

Money Lending (Regulation) Act, 2014 (the Act, 2014) comes into

play.

9. On merits, the defendants contend that the instant suit is

based on the cheques which were duly cancelled by the defendant

Nos. 1 and 2, and by abusing the custody of the cheques, which were

delivered in the distant past, by way of security, the plaintiff has

instituted this suit. The defendants denied that the suit is based on

the dishonoured cheques. In any event, according to defendants, the

defendant No.1 had issued the subject cheque in good faith as a

security against repayment of an unsecured loan.

10. The defendants further contend that in the wake of recession

in the market and the ill health of deceased defendant No.1 and the

consequent cash flow crunch, it was mutually decided by and

between the plaintiff and defendants that that the three cheques

(which form the basis of the suit), would stand cancelled and the

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liability to pay the interest and compensation would stand reduced,

and against the aggregate liability of Rs. 1 Crore, the plaintiff would

accept a sum of Rs.78,61,098/- and the said amount would be paid in

8 installments, for which the post dated cheques were issued.

Resultantly, the institution of the suit by misusing the custody of

the cheques which were delivered at a prior point of time is wholly

unsustainable. Thus, the defendants have raised substantial triable

issues and, therefore, the defendants are entitled to an

unconditional leave to defend the suit.

11. An affidavit in rejoinder is filed on behalf of the plaintiff

controverting the contentions in the affidavit in reply.

12. I have heard Ms. Sunanda Kumbhat, learned counsel for the

plaintiff, and Mr. Anuj Narula, the learned counsel for the

defendants at some length. With the assistance of the learned

counsel for the parties I have perused the pleading and documents

on record.

13. Ms. Kumbhat, learned counsel for the plaintiff, would urge

that in the face of overwhelming material to show that the

defendant Nos. 1 and 2 had availed a loan of Rs. 65 lakhs from the

plaintiff and had also drawn cheques towards the repayment of the

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principal amount along with compensation and additional interest,

the defence now sought to be raised by the defendant that the

plaintiff has misused the custody of cheques drawn towards

security can only be said to be a frivolous or sham defence. Laying

emphasis on the contentions in the affidavit in reply, Ms. Kumbhat

would submit that a meaningful reading of the contentions would

indicate that there is an explicit admission that the defendants

owed a sum of Rs. 1 Crore to the plaintiff, and, on the own showing

of the defendants, the said liability was allegedly reduced to Rs.

78,61,098/-. Ms. Kumbhat would further urge that the fact that the

defendants had received a sum of Rs 65 lakhs from the plaintiff is

rather incontrovertible. In the circumstances, the defendants are

not entitled to leave to defend the suit, submitted Ms. Kumbhat.

14. In opposition to this, Mr. Narula, the learned counsel for the

defendants assailed the very tenability of the suit. It was urged that

the suit does not deserve to be entertained as a summary suit as the

inscription as mandated by Order 37, Rule 2 (1)(c) of the Code is

conspicuous by its absence in the plaint. On this count alone, the

summary suit does not deserve to be entertained and the

defendants are entitled to an unconditional leave to defend the suit,

submitted Mr. Narula. Secondly, according to Mr. Narula, there is a

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serious dispute about the liability to pay the compensation and/or

interest. Evidently, there is no document to show any contract

between the parties to pay interest at a specified rate on the

principal amount. Thirdly, the defence of the defendants that the

plaintiff has misused the custody of the cheques drawn by way of

security, which already stood cancelled, can not be said to be a sham

or a moonshine defence as the letter dated 25 th July, 2020

addressed on behalf of the plaintiff clearly records the fact that 8

cheques were drawn by the defendants towards repayment of the

loan. If the aforesaid communication is read in conjunction with the

letter dated 7th March, 2020 addressed by the defendant No. 2 to the

plaintiff whereunder those 8 cheques were delivered towards

repayment of the loan and interest accrued thereon, the contention

of the defendants that the parties had agreed to restructure the

loan and reduce the liability becomes sustainable. Since, those

cheques were for the period subsequent to the period during which

the subject cheques were allegedly presented and dishonoured, the

defendants can be said to have raised a fair and bonafide defence.

15. To begin with, uncontroverted facts. Indisputably, the plaintiff

had advanced a sum of Rs. 65 lakhs to the defendants, in two

tranches. First a sum of Rs. 50 lakhs vide cheque dated 18 th July,

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2014. Second, a sum of Rs. 15 lakhs by a cheque dated 1 st October,

2015. The first advance was against a post dated cheque drawn for

Rs. 50 lakhs and also a bill of exchange. The second advance of Rs.

15 lakhs was allegedly against a cheque drawn for Rs. 65 lakhs to

cover the entire principal amount. There is also not much

controversy over the fact that initially the defendants paid interest

at the rate of 12% p.a. and later on interest was paid at the rate of

15% p.a. from April, 2017 to June, 2019.

16. In the light of the aforesaid uncontroverted facts, the defence

of the transaction being unenforceable for want of license under the

Act, 2014 is simply unsustainable in as much as the advance would

not fall within the definition of 'loan' as clause (j) which excludes an

advance made against a Negotiable Instrument comes into play and

takes the advance out of the purview of the Act 2014.

17. Mr. Narula, the learned counsel for the defendants made an

endevour to draw home the point that the fact that the subject

cheques were dishonoured upon presentment is not of decisive

significance. The instant suit, according to Mr. Narula, can not be

said to be based on the dishonoured cheques as those cheques

already stood cancelled by the issue of subsequent cheques for a

reduced amount.

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18. A two-pronged submission was canvassed. Firstly, in the

particulars of the claim, the plaintiff has not deliberately mentioned

the dates on which the cheqes were drawn. Secondly, the letter

dated 7th March, 2020 under which 8 cheques aggregating to a sum

Rs. 78,61,098/- were drawn towards repayment of the loan and

interest thereon, if read in conjunction with the letter dated 25 th

July, 2020 addressed by the plaintiff to the defendant, makes it

explicitly clear that the liability was restricted to the aforesaid

amount and those 8 cheques were drawn in supersession of the

earlier instrument. Emphasis was laid on the fact that in the letter

dated 25th July, 2020 the plaintiff had asserted that it would deposit

all 8 cheques, (including the 2 fresh cheques that were to be issued

by the defendants) on the respective dates and would not wait for

confirmation. This stand of the plaintiff, according to Mr. Narula,

indicates that there was no other liability except the one covered by

the aforesaid 8 cheques.

19. Mr. Narula invited the attention of the Court to the assertion

in the statutory notice dated 7th November, 2020, upon dishonor of

the subject cheques, to the effect that the plaintiff protested the

issuance of the aforesaid 8 cheques as it did not cover the amount of

compensation, agreed to be paid. This claim of the plaintiff is not at

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all borne out by the contemporaneous conduct and correspondence

exchanged between the parties, urged Mr. Narula.

20. I have given anxious consideration to the aforesaid

submissions. The submission is, at best, inferential. Since the

defendants No. 1 and 2 had drawn the 8 cheques on 7 th March,

2020, the defendants could not have subsequently drawn the

subject cheques payable on 10th July, 2020 and 3rd October, 2020 is

the thrust of the defence. Plainly, this inferential submission is in

teeth of the presumption of law contained in section 118 of the

Negotiable Instruments Act, 1881. Moreover, the plaintiff has

categorically asserted that upon the validity period of 2 of the

cheques drawn under the letter dated 7th March, 2020 having been

expired, the defendants had drawn the subject cheques.

21. The defence is required to be appreciated in the light of rather

incontestable fact that the plaintiff had advanced a sum of Rs. 65

lakhs to defendant No. 1. The defendants did pay interest, as agreed,

up to June, 2019. In the affidavit in reply, there is a categorical

contention that the parties agreed that the liability would be

reduced from Rs. 1 Crore to Rs. 78,61,098/-. This contention implies

that the defendants had agreed to repay the principal amount of Rs.

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65 lakhs along with compensation of Rs. 30 lakhs and Rs. 5 lakhs

towards interest for the delayed period. In this view of the matter,

even if the defence sought to be raised by the defendants is

construed rather generously, the dispute would essentially boil

down to the amount to be paid by the defendants to the plaintiff, by

way of return on the principal amount.

22. It is true that there is no inscription immediately below the

number of the suit in the in the plaint as is envisaged by Clause (c)

of the sub Rule (1) of Rule 2 of Order XXXVII of the Code. However,

evidently the suit is based on dishonoured cheques. In paragraph 29

of the plaint, there are averments in conformity with sub clause (a)

and (b) of sub rule (1) of Rule 2 of Order XXXVII of the Code.

23. Moreover, during the course of submissions, the learned

counsel for the plaintiff sought leave to amend the plaint so as to

incorporate the said inscription. It was resisted on behalf of the

defendants as the defendants had already raised the said ground. In

my view, in the totality of the circumstances, the omission to

incorporate the said inscription does not seem to be such that it

cannot be cured by permitting the plaintiff to amend the plaint.

Hence, I am inclined to allow the plaintiff to amend the plaint so as

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to incorporate the said inscription. The challenge to the tenability of

the suit, on the said ground, thus, no more survives.

24. In the aforesaid view of the matter, the defence raised by the

defendants can at best be said to be plausible yet lacking in element

of probability. Certainly, the defendants have not succeeded in

raising either a positively good defence or a fair and reasonable

defence. It would, therefore, be expedient to grant a conditional

leave to the defendants subject to deposit of the amount of Rs. 1

Crore in Court.

Hence, the following order:

ORDER

Comm Summary Suit (L) No.10938 OF 2021 :-

a] Leave to amend the plaint so as to incorporate the inscription

as envisaged by Order XXXVII Rule 2(1)(c) of the Code.

b] Necessary amendment be carried out within a period of two

weeks.

c] Amended copy of the plaint be served to the defendants within

two weeks thereafter.

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Summons for Judgment No. 24 OF 2021 :-

d]       Leave to defend is granted to the defendants subject to deposit

of a sum of Rs. 1,00,00,000/- (Rupees One Crore) in the Court within

a period of six weeks from today.

e] 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 thirty

days from the date of deposit;

f] 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 defendants after obtaining a Non-Deposit

Certificate from the Prothonotary and Senior Master of this Court.

g]       Summons for Judgment stands disposed.




                                            (N. J. JAMADAR, J.)




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