2017 (2) TMI 810 - HC - Indian Laws

Grant of leave to defend - suit for recovery - Held that - The submitted documents when read together, make it abundantly clear that there was never any understanding between the parties that the respondent/plaintiff had paid a sum of ₹ 1,06,50,000/- to the appellant/defendant so that he could utilize the said funds to construct eight flats in the suit premises and after the completion of the construction, parties had agreed that the said flats would be sold in the open market and the sale proceeds shared between them. On the contrary, all the aforesaid documents demonstrate an underlying common intent and purpose which was that the appellant/defendant had decided to sell the subject property outright to the respondent/plaintiff for a total sale consideration of ₹ 1,10,00,000/-. Nowhere has the appellant/defendant taken a stand in the leave to defend application that he had signed the said Agreement to Sell under any misconception or claimed that the same had been executed by him under any undue influence or coercion. Instead, even as per the averments made by him in the leave to defend application, the appellant/defendant has stated that the parties were known to each other as both of them belong to Bihar and have common relatives and friends. On a bare reading of the admitted documents, it is crystal clear that the appellant/defendant had issued four post-dated cheques totalling to a sum of ₹ 1,40,00,000/- in favour of the respondent/plaintiff towards repayment of the principal amount along with interest and all the said cheques were dishonoured on presentation. It is also an undisputed position that the respondent/plaintiff had served two legal notices dated 28.6.2014 and 7.5.2014 on the appellant/defendant calling upon him to pay the amounts, subject matter of the post dated cheques. Pertinently, the appellant/defendant did not give a reply to the said notices. When the respondent/plaintiff filed four criminal complaints against the appellant/defendant under Section 138 of the NI Act on account of dishonour of the aforesaid cheques, the latter had contested the said complaints. It is an admitted position that the appellant/defendant has been convicted by the learned MM in the said complaints. On a consideration of the facts of the case, this Court concurs with the finding returned by the learned trial court that no prima facie case has been made out by the appellant/defendant for grant of leave to defend and that leave to defend cannot be granted as a matter of course, unless there is a substantial defence and the pleas raised by the defendant gives rise to triable issues. Further, the affidavit of the appellant/defendant does not disclose a plausible defence which indicates that he may succeed in establishing the same.

Summary

Issues Involved:
1. Dismissal of leave to defend application.
2. Execution and terms of Agreement to Sell.
3. Execution and terms of Memorandum of Understanding (MOU).
4. Issuance and dishonor of post-dated cheques.
5. Legal principles governing leave to defend in summary suits.
6. Conviction under Section 138 of the Negotiable Instruments Act.

Detailed Analysis:

1. Dismissal of Leave to Defend Application:
The appellant/defendant challenged the trial court's order dated 01.10.2016, which dismissed his leave to defend application in a suit for recovery of ?1,40,00,000/- filed by the respondent/plaintiff. The trial court held that the appellant did not present any defense to the suit and concocted a false story to avoid payment, thus raising no triable issue.

2. Execution and Terms of Agreement to Sell:
The respondent/plaintiff claimed that the appellant/defendant approached him to purchase a plot of land for ?1,10,00,000/-. An Agreement to Sell dated 05.11.2010 was executed, recording an initial payment of ?4,00,000/- and subsequent payments totaling ?1,06,50,000/-. The balance of ?3,50,000/- was to be paid at the time of executing the Sale/Conveyance Deed. The appellant/defendant later expressed his inability to sell the land, leading to the cancellation of the Agreement to Sell.

3. Execution and Terms of Memorandum of Understanding (MOU):
A Memorandum of Understanding (MOU) dated 06.06.2013 was executed after the cancellation of the Agreement to Sell. The MOU acknowledged the receipt of ?1,06,50,000/- by the appellant/defendant and agreed to refund ?1,40,00,000/- to the respondent/plaintiff, including profit and interest. The appellant/defendant committed to paying this amount in three installments but failed to do so.

4. Issuance and Dishonor of Post-Dated Cheques:
Despite the commitment in the MOU, the appellant/defendant issued four post-dated cheques totaling ?1,40,00,000/-, which were dishonored due to insufficient funds. The respondent/plaintiff issued legal notices and subsequently filed four criminal complaints under Section 138 of the Negotiable Instruments Act.

5. Legal Principles Governing Leave to Defend in Summary Suits:
The court referenced several judicial precedents, including Santosh Kumar vs. Bhai Mool Singh and M/s Mechalec Engineers & Mfr. vs. M/s Basic Equipment Corporation, to outline the principles for granting or refusing leave to defend. These principles include assessing whether the defense is bona fide, raises triable issues, or is illusory or sham.

6. Conviction under Section 138 of the Negotiable Instruments Act:
The appellant/defendant was convicted by the learned MM in the criminal complaints filed under Section 138 of the NI Act due to the dishonor of the cheques.

Conclusion:
The court found no merit in the appellant's defense. The documents, including the Agreement to Sell, MOU, and Letter of Commitment, clearly indicated the appellant's obligation to refund the amount. The appellant's claim of a different agreement regarding the construction and sale of flats was unsupported by any documents. The court upheld the trial court's decision, concluding that the appellant's defense was baseless and did not raise any triable issues. The appeal was dismissed in limine, along with the pending application, for being devoid of merits.