Lallan Shah vs Bajrang Goyal
2015 Latest Caselaw 3588 Del

$~A-8.
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

                                       Date of decision: 05.05.2015

+      CS(OS) 2563/2012 and I.A. 15947/2013

       LALLAN SHAH                                       ..... Plaintiff
                          Through      Mr. Vinod Malhotra and Mr.
                                       Nikhil Malhotra, Advocates

                          versus

       BAJRANG GOYAL                                    ..... Defendant
                   Through             Mr. Satinder Kumar Garg,
                                       Advocate

       CORAM:
       HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J. (ORAL)

I.A.15947/2013 and CS(OS)2563/2012

1. This is an application filed by the defendant under Section XXXVII CPC seeking leave to defend the present suit.

2. The plaintiff has filed the present suit for recovery of Rs.26,01,902/-. The plaintiff is said to be a proprietorship concern dealing with scrap material/goods. It is averred that the defendant started dealing with the plaintiff by purchasing iron scrap in the month of August, 2011 by making cash payment. In the first week of November 2011, defendant purchased mixed iron scrap commonly known as Laddu Maal weighing 84.94 tons. Delivery of the said product i.e. mixed iron

scrap was taken by the defendant from the plaintiff directly from the weigh-bridges situated at Village Matiala, New Delhi in the vicinity of the plaintiff's godown. Supply was given on various dates between 10.11.2011 to 21.11.2011. The defendant instead of making payment in cash, on 21.11.2011 issued a post dated cheque for Rs.23,02,796 No. 351767 dated 06.12.2011 drawn on State Bank of Patiala in the name of Krishna Trading Company, the proprietary concern of the plaintiff. On the request of the defendant, the cheque was presented on 7.1.2012. The cheque was returned unpaid by the defendant's bankers with the remarks "Funds Insufficient". The plaintiff sent a legal notice dated 14.01.2012. Despite receipt of the notice, the defendant has not responded. Hence the present suit.

3. Learned counsel appearing for the defendant raised the following grounds to seek leave to defend:

(i) He submits that the defendant gave a blank cheque with no date, drawee name or amount. Only a signed blank cheque was handed over to the plaintiff who has, on his own, filled the blank cheque. Hence the cheque is no cheque in the eyes of law and does not give rise to any cause of action in favour of the plaintiff.

(ii) Reliance is placed on the reply of the plaintiff to the present application where the plaintiff has stated that the defendant handed a blank cheque and requested the plaintiff to fill the cheque as the defendant has high sugar, due to which problem his eye sight was poor and he had forgotten his spectacles also. The plaintiff requested the accountant Mr. Pooran to fill the date and other details in the cheque. It is only then after having assured that the amount

has been correctly filled, the defendant handed over the cheque to the plaintiff. It is urged that as per the reply, the cheque was filled up by Mr. Pooran in the presence of various other persons who would be material witnesses to prove that a blank cheque was issued and hence the defendant should be given an opportunity to lead evidence.

(iii) It is averred that in case a blank cheque is given, the holder has the authority to fill only ascertained amount and not any unascertained amount.

(iv) It is further urged that apart from the cheque there is no other document to show any consideration having passed to the defendant. The invoices relied upon by the plaintiff do not bear signatures of the defendant. There is no document/receipt of the weigh-bridge showing that delivery of goods had been made by the plaintiff.

(v) It is urged that the cheque was issued in the name of Krishna Trading Company. The suit is not filed by Krishna Trading Company. Hence on account of this flaw leave to defend should be granted.

(vi) Reliance is also placed on the returns for the value added tax filed by the plaintiff to contend that the address shown in the returns is not the godown in Matiala Village from where the defendant allegedly collected goods. This is clearly a discrepancy which throws doubt on the version of the plaintiff.

(vii) It is lastly alleged that after receipt of summons in the suit the defendant filed an application U/s 156 (3) of the Cr. P.C for

registration of an FIR against the plaintiff for manipulation fraud etc. The said application, was converted to a private complaint which is pending adjudication.

4. I will now deal with the above submissions of the defendant. As far as the first three contentions are concerned i.e. about blank cheque and 2-3 witnesses being available to prove that a blank cheque was given, etc., plaintiff has clarified that the cheque was not filled up by the defendant but it was filled upon by the accountant as has already been explained above. However, the defendant it averred scrutinized the cheque carefully before handing it over to the plaintiff after it was filled up by the accountant.

In my opinion the above contention of the defendant has no merits. When a person in the course of business gives a blank cheque, he knows the repercussion. He gives it for some consideration, benefit, advantage or gain. It would normally imply a authority to fill up the cheque to the receiver of the blank cheque. He cannot normally turn around to wriggle out of the liability. This court in Mojj Engineering Systems Ltd. & Ors. vs. A.B. Sugars Ltd. 154(2008) DLT 579, while dealing with a case where an undated cheque was presented, held that merely because the cheque was undated it does not mean that it was without consideration. This court held that since an undated cheque cannot be encashed it can only mean that the petitioner has authorized the complainant to enter an appropriate date on it. It was further held that when a blank cheque is signed and handed over, it means the person signing has given implied authority to the subsequent holder to fill it up. Reliance was also placed on Section 20 of the Negotiable Instruments

Act, 1881. The relevant portion of the judgment reads as follows :

"7. Even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young v. Grote, (1827) 4 Bing. 253, it was held that when a blank cheque is signed and handed over, it means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield v. Lord Londesborough, (1895-1899) All ER Rep 282, it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left. This common law doctrine was also affirmed by Justice Macnaghten in Griffiths v. Dalton, [1940] 2 KB 264, where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in Section 20 of the Negotiable Instruments Act, which deals with Inchoate Stamped Instruments. The Supreme Court in T. Nagappa v. Y.R. Murlidhar, AIR 2008 SC 2010, while discussing the scope of Section 20 held that by reason of this provision, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. In that view of the matter, all further issues that may be raised by the petitioners regarding the nature and scope of the authority of the respondent to put any particular date on the cheque in question, are all matters for trial."

5. To the above effect is also the judgment of this High Court in the case of Vijender Singh vs. Eicher Motors Ltd. and Anr. MANU/DE

2021/2011.

6. Reliance of the learned counsel for defendant on Purushothaman Nair P. vs. Sreekantan Nair, 2013 (4)Ker.LJ256/ MANU/KE/0784/2013 is misplaced. That was a case in which the court in the facts of the said case held that the plaintiff had no authority to fill up the signed blank cheque . Further in any case, in view of the two judgments of this High Court on the above aspect of a blank cheque, the same would be binding on this court.

7. Learned counsel for the defendant admits that the cheque is signed by the defendant. Learned counsel was asked as to what was the object of tendering a blank cheque to the plaintiff. The counsel submitted that as the defendant is a commission agent, the cheque was given as security. He urged that after receiving goods, he was to pay only if the goods were sold. As a security in case of default in payment to the plaintiff after sale, the blank cheque was given. He clarified that the defendant did not lift any goods.

8. The above explanation is completely unbelievable. The cheque was presented to the bankers on 07.01.2012. The plaintiff sent a legal notice on 14.01.2012. The dispatch proof is duly attached with the legal notice in the form of registered AD despatch receipts and courier despatch receipts. The tracking report of the courier confirms delivery of the legal notice on 16.01.2012. The address given on the receipt is the same as given in the memo of parties. The present suit is filed on 21.08.2012. The defendant has appeared in October, 2012. Till that date, the defendant took no steps to retrieve the cheque or get it cancelled. After notice has been served in the suit the defendant claims to have filed

a criminal complaint against the plaintiff. The contention that the blank cheque was given as security cannot be believed in the facts and circumstances of the case. The stand lacks bonafide. There is clearly no merit in the submissions of the defendant.

9. As far as the fourth contention raised by the defendant is concerned, i.e. that apart from the post dated cheque there is no document to show consideration, the said contention has no merit. The defendant has tendered the cheque. Merely because the invoices do not bear the signature of the defendant would not in any manner affect the fact that a cheque duly signed by the defendant has been tendered. A presumption would arise under Section 139 of the NI Act.

10. Regarding the fifth contention of the defendant, i.e. that the transaction took place with Krishna Trading Company whereas the plaint is filed by Sh. Lallan Shah, the plaint itself clarifies that the plaintiff is the proprietor of the firm Krishna Trading Company. The plaintiff has also filed certified copies of the application for registration of Value Added Tax. This document shows that the plaintiff, namely, Sh. Lallan Shah is the proprietor of Krishna Trading Company. Hence the plaintiff being the proprietor of Krishna Trading Company would be entitled to file the present suit. There is no merit in the said contention.

11. Coming to the sixth contention of the defendant i.e. address of the godown, the returns filed by the plaintiff that are relied upon by the defendant give the principal place of business at Rajendra Place, Hog Market, Delhi. The counsel for the plaintiff has clarified that this is the business premises of the plaintiff and the godown is separate. This contention of the defendant has no merit as the return mentions the place

at Rajendra Place as the principal place of business. Merely because the address of the godown is not mentioned on the returns would not make any difference.

12. Regarding the last contention of the defendant i.e. a criminal complaint has been filed against the plaintiff. The said contention is mis- placed and without merits. Admittedly the defendant filed the criminal complaint after receipt of summons in the present suit. It is obviously a belated reaction and afterthought and does not in any manner help the case of the defendant. It is also noteworthy that in the application for leave to defend there is no reference whatsoever to the fact of having filed a criminal complaint against the plaintiff. Even the copy of the criminal complaint and the order passed by concerned court is not filed with the documents. The said contention is without merits.

13. The issue would be as to whether in these above facts the defendant is entitled to leave to defend. The noted legal case on Order XXXVII CPC is that of M/s Mechalec Engineers & Manufacturers v. M/s Basic Equipment Corporation AIR 1977 SC 577. In para 8, the Hon'ble 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, shews 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."

15. In the light of the above legal position, let me review my findings.

The suit is filed on a cheque which was returned unpaid by the bankers of

the defendant for a sum of Rs.23,02,796/-. Section 139 of the Negotiable Instruments Act reads as follows:-

"139. Presumption in favour of holder. - 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 of other liability".

16. Hence a presumption arises unless the contrary is proved that the holder of the cheque received the cheque for discharge in whole or in part of any debt or other liability.

17. The plaintiff has along with the plaint filed various invoices accompanied by receipts of the Dharam Kanta. The defendant has denied these documents inasmuch as none of these documents bear the signature of the defendant. The only fact that is admitted is that the cheque in question was signed and handed over to the plaintiff in blank allegedly as a security.

18. I have dealt with the defences raised by the defendant above and have rejected the said contentions. Sequence of events show that as per the plaint the cheque was presented to the plaintiff on 21.11.2011. This date is not denied by the defendant in the application for leave to defendant. The cheque is dated 06.12.2011 which was presented on 07.01.2012 and has been returned unpaid on 10.01.2012. The legal notice has been sent to the defendant on 14.01.2012 which as per the record is duly delivered. The suit is filed on 22.08.2012. Defendant has entered appearance on 10.10.2012. There is no attempt by the defendant at any stage to seek to recover the cheque back or to get it cancelled as it has been wrongly sent for clearing by the plaintiff, as claimed by the

defendant. The absence of any reaction on the part of the defendant to these events falsifies the claim of the defendant. It is stated that only after receipt of notice in the suit a criminal complaint was filed before the appropriate court. It is noteworthy that in the application for leave to defend there is no reference to any criminal complaint having been filed by the defendant against the plaintiff. Further, no document has been filed to show the filing of the complaint or its outcome. No details are given. This fact was only stated in the course of arguments.

19. The defendant has been unable to rebut the presumption that arises under Section 139 of the Negotiable Instruments Act.

20. In my opinion, the defendant has failed to make out any case on merits. The entire defence of the defendant is moonshine and an eyewash. The present application is accordingly dismissed. CS(OS) 2563/2012

21. As the application for leave to defend has been dismissed, the suit is decreed in favour of the plaintiff and against the defendant for Rs.26,01,902/-. The plaintiff would be entitled to pendente lite interest @ 9% per annum from the date of filing of the suit till recovery. The plaintiff shall also be entitled to costs.

JAYANT NATH, J MAY 05, 2015 'raj/an'