2007 (4) TMI 698 - HC - Indian Laws

Maintainability of application seeking leave to defend - barred by limitation - Loan advanced acknowledged in books of account balance sheets and profit and loss accounts - Parties signed a Memorandum of Understanding - cheque issued in terms of the Memorandum dishonoured on account of insufficiency of funds - HELD THAT - I find that the plaintiff has placed complete details of the cheques which have been issued towards the loan advanced to the defendant. The amounts received from the defendant have also been detailed and statements of account have also been filed as Annexure A to the amended suit. The amount which was advanced by the plaintiff is acknowledged in the balance sheet of the defendant. The plaintiff has asserted that it has paid an amount of 64.30 lakhs and additionally 3.50 lakhs on 21st April 2001. The plaintiff has further advanced an amount of 5 lakhs on 24th April 2001. Against this the defendant has repaid an amount of 18.00 lakhs on 12th April 2004 and 11.00 lakhs on 15th April 2004 leaving a balance amount due and payable by the defendant of 43, 80, 000/-. The payments made by the defendant stand duly stated before this court. The cheques which were issued and dishonoured have been placed on record. The defendant has not urged that it has made any other payment to the plaintiff. In these circumstances even the amount which the defendant is liable to pay to the plaintiff is clearly established on record. I therefore find force in the submission on behalf of the plaintiff that the suit based on the balance sheets of the defendant company would by itself be maintainable and covered under clause 2 (b) (i) of Rule 1 of Order 37 of the Code of Civil Procedure 1908. There can be no dispute that the reliance by the plaintiff on the Memorandum of Understanding dated 1st April 2004 would also be covered under the same clause of Order 37 in as much as such Memorandum of Understanding would constitute a written contract. Undoubtedly in the instant case the defendant has failed to abide by the Memorandum of Understanding resulting in the plaintiff being entitled to submit that the same was not binding on its very terms. In the instant case the entries in the books of account are duly corroborated in the balance sheets as well as in the admissions of the defendant in its correspondence with the plaintiff as also the afore noticed Memorandum of Understanding dated 1st April 2004. Therefore such corroboration as is envisaged u/s 34 of the Indian Evidence Act is also available It is well settled that the power to grant pendente lite and future interest vests in the court u/s 34 of the Code of Civil Procedure and certainly there can be no prohibition to the maintainability of the present suit on the ground that the plaintiff has incorporated a prayer for pendente lite and future interest. Thus it has to be held that the objections of the defendant are wholly without merit and the defence disclosed in support of the leave to defend do not require adjudication. These principles clearly apply to the defence raised by the defendant which consequently deserves to be rejected. I therefore find no merit in the case by the defendant in this application and consequently the present application is hereby dismissed.

Summary

Issues Involved:
1. Applicability of the Punjab Registration of Money Lenders' Act, 1938.
2. Whether the claim is a debt or a liquidated demand under Order 37 of the Code of Civil Procedure, 1908.
3. Whether the suit is barred by limitation.

Issue-Wise Detailed Analysis:

1. Applicability of the Punjab Registration of Money Lenders' Act, 1938:
The defendant argued that the suit was barred under the Punjab Registration of Money Lenders' Act, 1938. The court examined whether the plaintiff was a "money-lender" as defined under Section 2(9) of the Act, which pertains to persons or firms engaged in the business of advancing loans. The court found no evidence to support that the plaintiff was engaged in the business of money lending. The plaintiff's loans to the defendant were not shown to be part of a systematic, repetitive, and continuous business of money lending. The court cited precedents such as AIR 1952 Punjab 207 and AIR 1973 Delhi 44, which clarified that casual loans do not make one a money-lender. Thus, the court rejected the defendant's plea on this ground.

2. Whether the claim is a debt or a liquidated demand under Order 37 of the Code of Civil Procedure, 1908:
The court considered whether the plaintiff's claim constituted a debt or liquidated demand. It was noted that the amounts advanced by the plaintiff were reflected in the defendant's balance sheets for several years, which constituted an acknowledgment of debt. The court referenced multiple precedents, including AIR 1964 Gujarat 208 and 73 (1998) DLT 593, which established that entries in balance sheets can be considered acknowledgments of debt under Section 18 of the Limitation Act. The court also discussed the legal definitions and requisites of "debt" and "liquidated demand," finding that the plaintiff's claim met these criteria. The court concluded that the suit was maintainable under Order 37 as it involved a debt acknowledged in writing by the defendant.

3. Whether the suit is barred by limitation:
The defendant argued that the suit was barred by limitation, asserting that each cheque issued by the plaintiff constituted an independent transaction, giving rise to separate causes of action. The court examined the timeline of transactions and payments, noting that the plaintiff maintained a running account with the defendant. Payments made by the defendant within the limitation period extended the limitation period under Section 19 of the Limitation Act. The court found that the suit, filed on 26th March 2004, was within the limitation period due to acknowledgments in the balance sheets and partial payments made by the defendant. The court also referenced the Memorandum of Understanding dated 1st April 2004, which further acknowledged the debt. Thus, the court held that the suit was not barred by limitation.

Conclusion:
The court dismissed the defendant's application for leave to defend, finding no merit in the objections raised. The court held that the plaintiff's claim was maintainable under Order 37 of the Code of Civil Procedure, 1908, and was not barred by the Punjab Registration of Money Lenders' Act, 1938, or by limitation. The defendant failed to raise any triable issue or present a bona fide defense, leading to the rejection of the application.