Nitin Aggarwal vs Praveen Sharma
2018 Latest Caselaw 6720 Del

*            IN THE HIGH COURT OF DELHI AT NEW DELHI

+                         RFA No. 922/2018

%                                              13th November, 2018


NITIN AGGARWAL                                           ..... Appellant
                          Through:       Mr. Manish Kumar Singh,
                                         Advocate (M. No.9911277043).
                          versus

PRAVEEN SHARMA                                          ..... Respondent

Through:

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

C.M. No.46737/2018(exemption)

1. Exemption allowed subject to just exceptions.

C.M. stands disposed of.

C.M. Nos.46735/2018(for condonation of delay in filing) & 46736/2018(for condonation of delay in re-filing)

2. For the reasons stated in the applications, delay of 27

days in filing and 31 days in re-filing the appeal is condoned.

C.M.s stand disposed of.

RFA No. 922/2018 and C.M. No. 46734/2018(stay)

3. This Regular First Appeal under Section 96 of the Code

of Civil Procedure, 1908 (CPC) is filed by the defendant in the suit

impugning the judgment of the Trial Court dated 26.03.2018 by which

trial court has dismissed the Leave to Defend application filed by the

appellant/defendant under Order XXXVII Rule 3(5) CPC and has

decreed the suit filed by the respondent/plaintiff under Order XXXVII

CPC for recovery of Rs.4.38 lakhs on the basis of a dishonored

cheque.

4. The facts of the case are that the respondent/plaintiff filed

the subject suit pleading that the appellant/defendant took a friendly

loan of Rs.3 lakhs from the respondent/plaintiff on 05.10.2014. The

loan amount was secured by a Post-Dated Cheque dated 18.04.2015 of

the appellant/defendant in favor of the respondent/plaintiff bearing no.

047032 drawn on IDBI Bank. The appellant/defendant had also, in

addition to giving a post dated cheque, executed Receipt-cum-

Acknowledgment on the same date of 05.10.2014 for the loan amount

of Rs. 3 lakhs. Since the cheque was dishonored on presentation on

06.05.2015, the subject suit for recovery was filed.

5. The appellant/defendant in the leave to defend application

contended that the cheque no doubt bears the signatures of the

appellant/defendant but this cheque was not given for a loan taken by

appellant/defendant from respondent/plaintiff. This cheque was infact

paid as security for a loan taken by one Mr. Rajan @ Krishan Sisonia

from the respondent/plaintiff. i.e. the loan amount was in fact taken by

Mr. Rajan from respondent/plaintiff and the appellant/defendant had

only given his cheque as security to respondent/plaintiff. It was also

pleaded in the leave to defend application that for one other loan by

Mr. Rajan from respondent/plaintiff, Mr. Rajan had got the

appellant/defendant and his brother Mr. Jatin Aggarwal to execute

some documents on his behalf. In lieu of the said loans some blank

cheques were issued by the appellant/defendant and his brother Mr.

Jatin Aggarwal which were given to respondent/plaintiff as security

for loans taken by Mr. Rajan. It was further pleaded that in the

proceedings under Section 138 of the Negotiable Instruments Act,

1881 (hereinafter referred to as 'N.I. Act'), the respondent/plaintiff

when was cross-examined on 10.04.2017, he could not give proper

answers as to how he had arranged the amount of Rs. 3 lakhs for being

given as loan by respondent/plaintiff to the appellant/defendant.

Accordingly, the appellant/defendant prayed for unconditional leave to

defend.

6. The principles with respect to grant of leave to defend are

stated by the Supreme Court in its recent judgment in the case of IDBI

Trusteeship Services Ltd. v. Hubtown Limited, (2017) 1 SCC 568 and

the relevant paras of which judgment read as under:-

"17. Accordingly, the principles stated in paragraph 8 of Mechelec case will now stand superseded, given the amendment of Order 37 Rule 3, and the binding decision of four judges in Milkhiram case, as follows:

17.1. If the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit.

17.2 If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the Plaintiff is not entitled to sign judgment, and the Defendant is ordinarily entitled to unconditional leave to defend.

17.3 Even if the Defendant raises triable issues, if a doubt is left with the trial judge about the Defendant's good faith, or the genuineness of the triable issues, the trial judge may impose conditions both as to time or mode of trial, as well as payment into court or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to

see that such triable issues are not shut out by unduly severe orders as to deposit or security.

17.4 If the Defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires.

17.5 If the Defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the Plaintiff is entitled to judgment forthwith.

17.6 If any part of the amount claimed by the Plaintiff is admitted by the Defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the amount so admitted to be due is deposited by the Defendant in court."

7. It is therefore seen that in case the defence is found to be

frivolous or vexatious or not raising a triable issue, thus leave to

defend cannot be granted.

8. Trial court in my opinion has rightly held that leave to

defend has to be refused i.e. the defence is frivolous and vexatious

raising no triable issues, inasmuch as, besides the appellant/defendant

not denying his signatures on the subject cheque, it is found that the

appellant/defendant has also executed a Receipt dated 05.10.2014

under his signatures acknowledging the receipt of loan of Rs. 3 lakhs.

Also, the appellant/defendant was served with a Legal Notice dated

08.09.2016 and the appellant/defendant has never denied the receipt of

the Legal Notice in the leave to defend application. The trial court has

also held that cross-examination under Section 138 of N.I. Act case

cannot be relied upon because that aspect is still sub judice as the case

under Section 138 of N.I. Act is still pending.

9. In my opinion, trial court has committed no error in

giving the aforesaid reasoning and conclusions for dismissing the

leave to defend application. In fact, I would like to add that in case a

fraud has been committed by respondent/plaintiff and Mr. Rajan upon

the appellant/defendant for loans allegedly granted to Mr. Rajan by

respondent/plaintiff, and that respondent/plaintiff was found to have

misused the subject cheque, there was no reason why the

appellant/defendant would not have issued a legal notice to Mr. Rajan

or the respondent/plaintiff for a fraud having been perpetuated upon

the appellant/defendant for misusing the cheque given by the

appellant/defendant. Also, no complaint to any authority, much less a

criminal complaint, has been filed by the appellant/defendant that the

subject cheque has been illegally misused or was illegally retained by

the respondent/plaintiff. I would also like to give an additional reason,

that besides the fact that the case under Section 138 of the N.I. Act is

pending, in view of the provision of Section 118 of the N.I. Act there

is a presumption of cheque being given for consideration and a person

who takes a loan and gives his cheque to secure the loan, cannot argue

that the respondent/plaintiff who gave the loan must prove that he had

the financial capacity to give the loan. In any case, the

respondent/plaintiff has stated in the cross-examination in the case

under Section 138 of N.I. Act that he had arranged amount by himself

and also that he borrowed some amounts from his father and a close

friend, and which in my opinion is sufficient justification for the

respondent/plaintiff to have moneys for being granted as a loan to the

appellant/defendant. In fact the appellant/defendant seems to have a

belief that money borrowed is money earned.

10. In view of the aforesaid discussion, I do not find any

merit in the appeal. Dismissed.

NOVEMBER 13, 2018                            VALMIKI J. MEHTA, J
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