Delhi High Court
Madhu Rani vs Naveen Sharma on 2 December, 2011
Author: G. S. Sistani
14.
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 199/2010
% Judgment dated 02.12.2011
MADHU RANI ..... Plaintiff
Through : Mr. Sudhir Naagar and Mr. Narveer
Dabas, Advs.
versus
NAVEEN SHARMA ..... Defendant
Through : Mr. Avadh Kaushik, Adv.
CORAM:
HON'BLE MR. JUSTICE G.S.SISTANI
G.S.SISTANI, J (ORAL)
I.A.NO.3028/2011.
1. This is an application filed by defendant under Order XXXVII Rule
3(5) of the Code of Civil Procedure seeking leave to defend.
2. Plaintiff has filed the present suit under the Provisions of Order
XXXVII CPC for Recovery of Rs.38,85,000/-.
3. The necessary facts, to be noticed for disposal of the present
application, are that in the month of September, 2008, defendant
approached the plaintiff, who is a housewife, with regard to certain
schemes of the business being run by the defendant under the name
of M/s Money Mantra, which was the sole proprietorship concern of
defendant. The plaintiff was assured by the defendant of the lucrative
CS(OS) 199/2010 Page 1 of 12
returns on the investment made by the plaintiff with the defendant
company. Based on the assurances and representations of the
defendant plaintiff agreed to invest her hard earned money with the
defendant and it was agreed that defendant would pay to the plaintiff
interest at the rate of 10% on the invested amount and would repay
the principal amount after twelve months. Defendant further assured
the plaintiff that the amount invested by the plaintiff would be totally
safe and defendant would utilize the same as per law and not for any
illegal activities. Believing the assurances given by the defendant,
plaintiff invested Rs.38,58,000/- with the defendant, out of which,
Rs.37,00,000/- was paid by the plaintiff to the defendant vide cheque
bearing no.161829 drawn on State Bank of India and the balance
amount was paid in cash. Defendant issued a duly signed receipt to
the plaintiff bearing no.6760 dated 29.9.2008, acknowledging receipt
of a total sum of Rs.38,85,000/-. A copy of the receipt has been
placed on record. To secure the plaintiff, defendant had handed over
a post-dated cheque dated 22.9.2009 bearing no.884843, drawn on
Citibank, Delhi, towards the principal amount of Rs.38,85,000/-.
Plaintiff assured that the said cheque would be encahsed on
presentation.
4. Learned counsel for the plaintiff submits that in discharge of his
liability defendant had paid monthly interest only for two months and
thereafter cited financial constraints due to recession. Defendant,
however, promised to pay outstanding interest amount in lumpsum
after September, 2009, once the principal amount is repaid. Counsel
further submits that on 22.9.2009 the aforesaid cheque in the sum of
CS(OS) 199/2010 Page 2 of 12
Rs.38,85,000/- was presented by the plaintiff to the Bank, however,
the same was returned with the remark „Account closed‟ vide return
memo of State Bank of India dated 23.9.2009, a copy of which has
been placed on record.
5. Plaintiff learnt that defendant has been arrested in case FIR
No.109/09 under Sections 406/420/120-B IPC, Police Station
Economic Offences Wing. Counsel next submits that plaintiff came
to know from various sources that defendant has been accused of
cheating various innocent persons of crores of rupees. Plaintiff issued
a legal notice on 3.10.2009 to the defendant demanding the amount
due as per the cheque. The said notice was sent to the Office of the
defendant as also through Jail Superintendent where the defendant
was lodged. Copy of the notice and postal receipts have been placed
on record. Despite the legal notice and the plaintiff having initiated
steps under Section 138 of Negotiable Instruments Act, no amount
has been received by the plaintiff from the defendant. Counsel for the
plaintiff submits that present suit is based on the cheque as well as on
the receipt issued by the defendant.
6. Learned counsel for the defendant submits that defendant is entitled
to unconditional leave to defend having regard to the fact that
receipt, sought to be relied upon by the plaintiff, does not show as to
how much amount has been paid by the plaintiff by cheque and how
much amount has been paid by cash to the defendant and in the
receipt only the cheque number has been mentioned. Counsel further
submits that the cheque, sought to be relied upon by the plaintiff, was
an undated cheque, which was stolen from the house of the defendant
CS(OS) 199/2010 Page 3 of 12
after he was sent to jail and, thus, the cheque cannot be relied upon
by the plaintiff and the same cannot be made the basis for filing
present suit under the provisions of Order XXXVII CPC.
7. Learned counsel for the defendant submits that the allegations made
by the plaintiff are baseless, wild and unfounded. Counsel further
submits that even otherwise the cheque was dishonoured on account
of the fact that the said bank account of the defendant was seized
under the instructions of Economic Offences Wing. Counsel next
submits that plaintiff had parted with the money with open eyes for
the purpose of speculation in the share market and not that the
amount was to be returned after one year. Counsel also submits that
even otherwise the plaintiff in her cross-examination in the
proceedings filed under Section 138 of Negotiable Instruments Act
has stated that she is a housewife; the plaintiff has not disclosed her
source of income and in fact has stated that she does not even know
the defendant and is not even aware about the pendency of the
present suit. It is in these circumstances, defendant has sought
unconditional leave to defend.
8. Learned counsel for the defendant has drawn the attention of the
court to the Memo of Parties filed in the present suit and cross-
examination of the plaintiff in the proceedings filed under Section
138 of Negotiable instruments Act, a copy of which has been placed
on record. Learned counsel for the plaintiff submits that in the Memo
of Parties the plaintiff has mentioned her address as 17, Gupta
Colony, Delhi, while in her cross-examination in the proceedings
under Section 138 of Negotiable instruments Act, the plaintiff has
CS(OS) 199/2010 Page 4 of 12
stated that she is residing at Gulabhi Bagh for the past eight to ten
years. Counsel further submits that cross-examination of the plaintiff
would show that plaintiff is a housewife and she is residing with her
family. Counsel next submits that on the one hand, the plaintiff has
disclosed that she has no source of income but the cheque was issued
to the defendant after her husband had sold a property, on the other
hand the plaintiff has also stated that she had paid a sum of
Rs.38,58,000/- to the defendant from her past savings and out of the
sale of the said property. She also goes on to state that this amount
was given by her son and is unable to disclose the particulars of the
property, which has been sold.
9. I have heard counsel for the parties and also perused the plaint, the
application and the documents filed along with present plaint. Before
dealing with the rival contentions of learned counsel for the parties, it
would be useful to refer to Mechelec Engineers and Manufacturers
v. Basic Equipment Corporation, reported at 1977 AIR (SC) 577
wherein the Supreme Court has laid down guidelines for considering
an application for leave to defend. Para 8 reads as under :
8. In Kiranmoyee Dassi Smt v. Dr J. Chatterjee, (1945)
49 Cal WN 246, 253, Das, J., after a comprehensive
review of authorities on the subject, stated the principal
s applicable to cases covered by Order 17 CPC 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.
CS(OS) 199/2010 Page 5 of 12
(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, shews such a state of facts as leads
to the inference that at the trial of the action be
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."
CS(OS) 199/2010 Page 6 of 12
10. In order to succeed in the present application, defendant must
establish that his defence is bona fide and he has been able to raise
triable issues. On the contrary, if the defence sought to be raised, is
false, sham or moonshine, the same is to be rejected and the
application is to be dismissed.
11. It would be useful to refer to the observations of the Supreme Court
in the case of V.K. Enterprises Vs.m/S. Shiva Steels 2010 (IX) AD
(SC) 426 and more particularly paragraphs 8, 9 & 10, which read as
under:
"8. Order XXXVII C.P.C. has been included in the
Code of Civil Procedure in order to allow a person, who
has a clear and undisputed claim in respect of any
monetary dues, to recover the dues quickly by a
summary procedure instead of taking the long route of a
regular suit. The Courts have consistently held that if the
affidavit filed by the defendant discloses a triable issue
that is at least plausible, leave should be granted, but
when the defence raised appears to be moonshine and
sham, unconditional leave to defend cannot be granted.
What is required to be examined for grant of leave is
whether the defence taken in the application under
Order XXXVII Rule 3 C.P.C. makes out a case, which if
established, would be a plausible defence in a regular
suit. In matters relating to dishonour of cheques, the
aforesaid principle becomes more relevant as the
cheques are issued normally for liquidation of dues
which are admitted. In the instant case, the defence
would have been plausible had it not been for the fact
that the allegations relating to the interpolation of the
cheque is without substance and the ledger accounts
relating to the dues, clearly demonstrated that such dues
had been settled between the parties. Moreover, the
CS(OS) 199/2010 Page 7 of 12
issuance of the cheque had never been disputed on
behalf of the Petitioner whose case was that the same
had been given on account of security and not for
presentation, but an attempt had been made to misuse
the same by dishonest means.
9. Against such cogent evidence produced by the
plaintiff/respondent, there is only an oral denial which is
not supported by any corroborative evidence from the
side of the Petitioner. On the other hand, the ledger book
maintained by the Respondent and settled by the
Petitioner had been produced on behalf of the
Respondent in order to prove the transactions in respect
of which the cheque in question had been issued by the
Petitioner.
10. In our view, the defence raised by the Petitioner
does not make out any triable issue and the High Court,
has dealt with the matter correctly and has justifiably
rejected the Petitioner's application under Order
XXXVII Rule 3 C.P.C. and the same does not call for
interference by this Court. The Special Leave Petition is,
therefore, dismissed, but without any order as to costs."
12. As per the plaint, the plaintiff approached defendant in the month of
September, 2008, with regard to certain schemes of business being
run by the defendant in the name of M/s Money Mantra of which
defendant was the sole proprietor. The defendant assured the plaintiff
of lucrative returns on the investment. Believing the assurances made
by the defendant to the plaintiff, plaintiff invested Rs.38,85,000/-
with the defendant out of which Rs.37,00,000/- was paid by cheque
and the remaining amount was paid in cash. Defendant issued a
receipt dated 29.9.2008 to the plaintiff acknowledging receipt of
Rs.38,85,000/-. A post-dated cheque dated 22.9.2009 was issued by
the defendant to the plaintiff towards the principal amount and
defendant also assured the plaintiff that the said cheque would be
encashed on presentation. The said cheque when presented by the
plaintiff was dishonoured with the remark „Account closed‟. Plaintiff
came to know that defendant has been arrested in case FIR
No.109/2009 with the allegation of cheating. Plaintiff thereafter sent
a legal notice dated 3.10.2009 to the defendant at the office of the
defendant and also through Jail Superintendent, however, the amount
has not been returned by the defendant to the plaintiff, which forced
the plaintiff to file the present suit.
13. The defence, sought to be raised by the defendant, in this leave to
defend application is that he is not liable to pay any amount to the
plaintiff and the defendant was in judicial custody when the blank
signed cheque was stolen from the premises of the defendant.
Another defence, sought to be raised by the defendant, is that as per
the plaintiff herself the defendant had issued a post-dated cheques on
22.9.2009 and the present suit cannot be based on a post-dated
cheque. The defendant has also drawn the attention of the Court to
the cross-examination of the plaintiff in proceedings under Section
138 of Negotiable Instruments Act. It is the contention of learned
counsel for the defendant that reading of cross-examination would
show that the plaintiff has not been able to establish the source of
income as she claims herself to be a housewife. It is also submitted
by counsel for the defendant that the plaintiff has not deposed
truthfully as she is unable to give her correct residential address.
14. The aim and object of introducing the provision of Order XXXVII
CPC is to grant speedy and summary justice in matters where the
plaintiff is able to establish a clear and undisputed claim. In order to
succeed in an application for leave to defend, defendant must
disclose a triable issue or at least a plausible defence. In case,
defence of the defendant is frivolous or vexatious no leave is to be
granted to the defendant. The stand taken by the defendant that a
blank cheque was stolen from his house during the period he was in
jail is frivolous and unacceptable. Even otherwise, there is nothing
on record which suggests that any family member of the defendant
lodged any FIR with regard to theft of cheque of the defendant or
that the plaintiff has stolen the cheque in question from the house of
the defendant. The defence is sham and moonshine as it is
unexpected that his house would be lying unlocked or plaintiff, who
is a lady would walk into his house and steal the blank cheque.
15. Another defence, which has been raised is that the plaintiff has not
been able to establish her sources of amounts deposited with the
defendant. I have also carefully perused the cross-examination of the
plaintiff in the proceedings filed under Section 138 of Negotiable
Instruments Act, a copy of which has been placed on record. Cross-
examination of the plaintiff would show that plaintiff is a housewife
and she is residing with her family. Plaintiff has disclosed that she
has no source of income, however, the said cheque was issued to the
defendant after her husband had sold a property. The plaintiff has
also stated that she had paid a sum of Rs.38,58,000/- to the
defendant, which was from her past savings and out of the property
sold by her husband. She also goes on to state that this amount was
given by her son and she is unable to disclose the particulars of the
property sold.
16. The cross-examination of the plaintiff shows that the plaintiff has
been able to satisfactorily establish the source of her money. Even
otherwise, it is not necessary for the plaintiff to establish the source
of income. What is relevant is that this amount was paid by the
plaintiff to the defendant, which is evident from the receipt duly
given by the defendant and the presumption, which is to be drawn in
favour of the plaintiff on account of the post dated cheque having
been issued by the defendant in favour of the plaintiff. While
plaintiff has been able to place cogent evidence on record there is
only an oral denial, which is not supported by any corroborative
evidence from the side of the defendant. The defendant has not been
able to make out any triable issue.
17. Having regard to the fact that plaintiff is a housewife, it is not
expected for her to give answers, which are meticulous in nature,
however, she has categorically stated that this amount was paid to the
defendant out of the savings and out of the proceedings received
from sale of the property. The contention raised by counsel for the
defendant with regard to address mentioned by the plaintiff in the
Memo of Parties filed in the present suit is of Gupta Colony,
however, she has stated in her cross-examination that she is residing
in Gulabi Bagh, is not a triable issue and cannot be a ground for
granting leave to defend.
18. Accordingly, present application is without any merit and the same
stands dismissed.
CS(OS) 199/2010
19. In view of above present suit is decreed in the sum of Rs.38,85,000/-
with interest at the rate of 8%, per annum, from the date of filing of
the suit till realisation.
G.S.SISTANI,J
DECEMBER 02, 2011
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