2024 (6) TMI 707 - HC - Indian Laws

Dishonour of Cheque - insufficient funds - Prayer for leave to defend the suit unconditionally - only defence of the defendant is that the defendant has issued the cheques for security but the plaintiff is illegally withholding the original title deeds and due to such act, the defendant has suffered severe loss and damages - HELD THAT - In the present case, the defendant has no defence and the defence set up by the defendant are illusory and sham. This Court finds that the plaintiff do get decree against the defendant for a sum of Rs. 7,23,63,548/-. The plaintiff also entitled to get further interest at the rate of 12% per annum from 13th April, 2017, on Rs. 4,05,00,000/- till the realization to the amount. Application allowed.

Issues Involved:
1. Application for summary judgment by the plaintiff.
2. Application for leave to defend by the defendant.
3. Recovery of the amount advanced by the plaintiff.
4. Dishonor of cheques issued by the defendant.
5. Criminal proceedings under Section 138 of the Negotiable Instrument Act, 1881.
6. Jurisdiction and maintainability of the suit.
7. Alleged suppression of material facts by the plaintiff.
8. Alleged withholding of original title deeds by the plaintiff.
9. Claim for damages by the defendant.

Issue-wise Detailed Analysis:

1. Application for Summary Judgment by the Plaintiff:
The plaintiff filed an application (G.A. No. 6 of 2022) for summary judgment and decree against the defendant for Rs. 7,23,63,548/- along with interest. The plaintiff argued that the defendant had no defense to the suit and that the defense sought to be raised was "moonshine and sham."

2. Application for Leave to Defend by the Defendant:
The defendant filed an application (G.A. No. 7 of 2022) for unconditional leave to defend the suit (C.S. No. 116 of 2017). The defendant argued that the suit was not maintainable due to suppression of material facts and that it was barred under the Commercial Courts Act, 2015. The defendant also claimed that the court lacked jurisdiction.

3. Recovery of the Amount Advanced by the Plaintiff:
The plaintiff advanced Rs. 4,05,00,000/- to the defendant for the purchase of immovable properties. The defendant acknowledged the amount but later informed the plaintiff that they could not convey the properties and agreed to return the amount. The defendant issued multiple cheques to discharge the liability, all of which were dishonored due to "insufficient funds."

4. Dishonor of Cheques Issued by the Defendant:
The defendant issued cheques totaling Rs. 4,05,00,000/- and additional cheques for interest, all of which were dishonored. The plaintiff presented the cheques for encashment, but they were returned with the remark "insufficient funds."

5. Criminal Proceedings under Section 138 of the Negotiable Instrument Act, 1881:
The plaintiff initiated proceedings against the defendant under Section 138 of the Negotiable Instrument Act, 1881, and also filed an application under Section 156(3) of the Code of Criminal Procedure, 1971. The Park Street Police Station registered a case against the directors of the defendant under Sections 420/406/120B of the Indian Penal Code, 1980. The defendant's directors filed revisional applications, and the High Court directed them to deposit Rs. 3 crores, which was done.

6. Jurisdiction and Maintainability of the Suit:
The defendant argued that the suit was commercial in nature and that the court had no jurisdiction. However, the court found that the defendant had required financial assistance and that the plaintiff had agreed to provide interest-free financial accommodation, thus negating the jurisdictional argument.

7. Alleged Suppression of Material Facts by the Plaintiff:
The defendant claimed that the plaintiff had suppressed material facts, making the suit bad for waiver, estoppel, and acquiescence. The court did not find merit in this argument.

8. Alleged Withholding of Original Title Deeds by the Plaintiff:
The defendant alleged that the plaintiff was deliberately withholding the original title deeds, causing them significant loss and damages. However, the court noted that the defendant had not filed any counterclaim or separate suit for the return of the documents. The plaintiff's counsel stated that the plaintiff was willing to return the title deeds once the amount along with interest was paid.

9. Claim for Damages by the Defendant:
The defendant claimed to have suffered loss and damages due to the plaintiff's withholding of the original title deeds but did not provide any detailed explanation or file a counterclaim. The court found this defense to be illusory and sham.

Conclusion:
The court concluded that the defendant had no substantial defense and that the defenses raised were illusory and sham. The court granted the plaintiff a decree for Rs. 7,23,63,548/- along with further interest at the rate of 12% per annum from 13th April, 2017, on Rs. 4,05,00,000/- until realization. The plaintiff's application (G.A. No. 6 of 2022) was allowed, and the defendant's application (G.A. No. 7 of 2022) was dismissed. The suit (C.S. No. 116 of 2017) was disposed of accordingly.

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