Delhi High Court
Trustline Securities Ltd. vs Ashish Sharma on 1 December, 2015
Author: Najmi Waziri
IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 23.11.2015
Pronounced on: 01.12.2015
+ CS(OS) 705/2012
TRUSTLINE SECURITIES LTD. ..... Plaintiff
Through: Mr. Sanjeev Narula, Adv.
Versus
ASHISH SHARMA ..... Defendant
Through: None
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J.
IA No.19581/2014
1. This suit has been filed under Order XXXVII of the Code of Civil
Procedure, 1908 for the recovery of Rs. 25,00,000/- along with pendent lite
and future interest. The plaintiff is a company engaged in the business of
share trading and is also a registered share broker with various stock
exchanges.
2. It is the plaintiff's case that the defendant had entered into a Member-
Client Agreement dated 10.08.2011 for the purpose of opening a trading
account with the plaintiff-company. After completing all the formalities
prescribed by the SEBI, the defendant's trading account was opened and he
was given a unique client code being No. 151A08.
3. Thereafter, the defendant gave the plaintiff a cheque dated 09.08.2011
of Rs.25,00,000/- bearing number 763926 drawn on ICICI Bank, with the
assurance that the cheque would be honoured upon presentation.
4. During the course of trading over the next few months, the defendant
incurred considerable losses and his trading account was debited with an
amount of Rs. 26,01,443/-. The plaintiff made several correspondences to the
defendant, requesting him to clear the outstanding debit amount, which the
defendant promised to clear at the earliest.
5. In order to clear the debit amount in the defendant's trading account, the
plaintiff presented the aforesaid cheque dated 09.08.2011, however, the same
was returned dishonoured with the Banker's Memo dated 19.12.2011, citing
the reason for dishonour as "Funds Insufficient".
6. The plaintiff issued the defendant a legal notice dated 26.12.2011 to
which the latter did not respond nor did he make any efforts to clear the debit
balance in his trading account.
7. In his leave to defend application, the defendant has stated that the
plaintiff has dragged him into a frivolous suit; that the plaintiff has failed to
substantiate the loss to the tune of Rs. 26,04,133/-; that the cheque bearing
No.763926 dated 09.08.2011 which was allegedly given by the defendant to
the plaintiff a day before the Member-Client Agreement dated 10.08.2011
was signed does not necessarily mean that it was towards payment in
discharge of any liability; that the debit amount claimed is for Rs.26,04,133/-
while the suit amount, i.e., Rs.25,00,000/- is different and thus sufficient to
cast doubt upon the alleged facts under which this suit has been based.
8. In the reply to the leave to defend application, the plaintiff has stated
that the suit has been filed on the basis of the cheque handed over by the
defendant and is maintainable under Order XXXVII of the Code of Civil
Procedure, 1908. Further, the statement of account which has been filed by
the plaintiff clearly depicts the losses suffered by the defendant in his trading
account. Reliance is placed upon Section 139 of the Negotiable Instruments
Act, 1881, which presumes, unless the contrary is proved, that the cheque
holder receives the cheque in furtherance of discharge of a debt or a liability.
9. A suit under Order XXXVII CPC would be maintainable if the recovery
is sought of a debt or liquidated demand payable by the defendant on the
basis of a written contract or in the nature of a debt, as sought to be in the
present case, although ordinarily now-a-days, the trading of shares is done on
the basis of telephone calls by the account holder to the trader and it is not
impossible that a debit balance of Rs.26,04,133/- can be clocked even in a
single transaction. Nevertheless, each transaction has to be communicated to
the account holder so that he is fully aware of the amount of liability
outstanding in his account.
10. The plaint mentions the aforesaid amount as outstanding as on 25th
February, 2012, but it seeks repayment of only Rs.25,00,000/- along with
interest @ 24% accrued thereon. It is somewhat odd that the plaintiff would
seek recovery of a lesser amount against the defendant than the losses
suffered by it on account of trading of shares allegedly carried out upon
instructions of the defendant. The suit does not, other than the legal notice,
show as to how the defendant was communicated of the daily transactions on
his behalf either through the internet or otherwise. The plaintiff failed to
adduce any evidence which would show how the communication regarding
the daily transactions was effectuated. It was only in the reply to the leave to
defend application that the plaintiff had annexed, for the first time copies of
log reports of purported share transactions on behalf of the defendant.
11. The Court is of the view that the aforesaid factors are sufficient grounds
of plausible defence. Hence, the defendant should be granted leave to defend,
albeit conditionally. In the circumstances, leave to defend is granted only
for the limited purpose of determining the amount of losses of Rs.26,01,443/-
as a debit balance in the account of the defendant. The application is disposed
off in the above terms.
CS(OS) No.705/2012
13. List before the Joint Registrar on 20th January, 2016 for completion of
pleadings and leading of evidence apropos the above issue only.
NAJMI WAZIRI, J
DECEMBER 01, 2015
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