2007 (8) TMI 811 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the cheques issued by the defendants.
2. Alleged dues owed by the plaintiff to the defendants.
3. Limitation period for filing the suit.
4. Liability of the guarantors.

Summary:

1. Validity of the Cheques:
The defendants contended that the cheques were issued in blank and only as security, with the amounts filled in by the plaintiff without their consent. The court found this defense to be "sham, illusionary, moonshine and an afterthought," as the defendants had acknowledged their liability in various correspondences, including a covering letter dated 16.3.2000, which accompanied the cheques. The court concluded that the cheques were given towards the price of goods and not as collateral security.

2. Alleged Dues Owed by the Plaintiff:
The defendants claimed that the plaintiff owed them more than Rs. 4 crores on account of Central Excise, MODVAT, and conversion charges due to the plaintiff's failure to provide necessary documents. The court noted that the defendants did not make any claim or counterclaim for these amounts until the leave to defend application and that such claims were barred by limitation. Consequently, this defense did not raise any triable issue.

3. Limitation Period for Filing the Suit:
The defendants argued that the suit was barred by limitation as it was filed beyond three years from the date of issuance of the cheques (16.3.2000). The court held that the limitation period commenced from the date the cheques were returned unpaid (1.6.2000), making the suit filed on 23.5.2003 within the limitation period.

4. Liability of the Guarantors:
Defendants No. 2 to 5, who had provided personal guarantees for the dues of defendant No. 1, were held jointly and severally liable. The court referred to the personal guarantees executed by these defendants and confirmed their liability as co-extensive with that of defendant No. 1.

Conclusion:
The court dismissed the defendants' application for leave to defend, finding their defenses to be without merit. The plaintiff was awarded a decree for Rs. 5,51,74,220/- with interest at 12% p.a. from the date of the suit until realization, instead of the claimed 25% p.a. The defendants were entitled to an adjustment of Rs. 35 lacs already paid during the pendency of the suit.