2025 (3) TMI 893 - HC - Indian Laws

Dishonour of cheque - cheques were issued under coercion or not - Dismissal of application of the appellant seeking leave to defend the suit - Order XXXVII of CPC - HELD THAT - So far as drawing of the cheques in question is concerned there is clear admission on the part of the appellant that the same were drawn by him. As regards the allegation that the cheques were obtained after abducting the appellant and illegally detaining him admittedly no police complaint was lodged nor even any notice was issued by the appellant to the respondent or the bank alleging the issuance of cheques under force. Nothing prevented the appellant from instructing his bank to stop payment of the said cheques on the ground that the same were not issued voluntarily but that also was not done. That being so pushing the parties to undergo rigmaroles of trial would be travesty of justice since there is no triable issue in this regard. As regards the liability argument the issuance of the cheques in question in itself would raise a presumption of legally enforceable debt. As mentioned above it is not in dispute that the present respondent paid a total sum of Rs.14, 04, 000/- to the appellant towards investments. And as regards the cheques in question admittedly drawn by the appellant were towards repayment of the money invested by the respondent. As mentioned above there is not even shred of material to show that the said cheques were not voluntarily issued by the appellant. Merely because the appellant opted not to initiate proceedings under Section 138 Negotiable Instruments Act his right to claim recovery of money through this suit cannot get defeated. Conclusion - The appellant has no substantial defence and raises no genuine triable issues; rather the defence raised by the appellant is completely frivolous and vexatious. Appeal dismissed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the appellant was entitled to leave to defend the summary suit filed under Order XXXVII of the Civil Procedure Code (CPC).
• Whether the cheques issued by the appellant were obtained under coercion, thereby raising a triable issue.
• Whether the absence of a criminal complaint under Section 138 of the Negotiable Instruments Act affects the enforceability of the debt.
• Whether the issuance of cheques by the appellant constitutes a presumption of a legally enforceable debt.

ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents:

The legal framework revolves around Order XXXVII CPC, which provides for a summary procedure for certain suits, allowing a plaintiff to obtain a quick judgment unless the defendant can demonstrate a substantial defense. The Supreme Court's decision in IDBI Trusteeship Services Limited vs. Hubtown Limited serves as a guiding precedent, outlining the principles for granting or denying leave to defend.

Court's interpretation and reasoning:

The Court emphasized that the discretion to grant leave to defend under Order XXXVII is informed by the principles laid down in the IDBI Trusteeship Services Limited case. The Court must assess whether the defense is substantial, raises triable issues, or is frivolous and vexatious.

Key evidence and findings:

The appellant admitted to issuing the cheques in question. The appellant's defense that the cheques were obtained under coercion lacked substantiation, as no police complaint or bank notice was filed to support this claim. The absence of any action to stop payment on the cheques further weakened the appellant's position.

Application of law to facts:

The Court applied the principles from the IDBI Trusteeship Services Limited case, concluding that the appellant's defense was neither substantial nor genuine. The appellant's failure to take any preventive or corrective action against the alleged coercion suggested that the defense was frivolous.

Treatment of competing arguments:

The appellant argued that the absence of a Section 138 complaint negated the liability. However, the Court clarified that the non-initiation of criminal proceedings does not preclude the respondent's right to civil recovery. The presumption of a legally enforceable debt arises from the issuance of cheques, which the appellant failed to rebut effectively.

Conclusions:

The Court concluded that the appellant did not raise any genuine triable issues and that the defense was frivolous. Consequently, the appeal was dismissed, and the trial court's judgment was upheld.

SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning:

The Court quoted the Supreme Court's decision in IDBI Trusteeship Services Limited, emphasizing that "the discretion that a Judge exercises under Order 37 to refuse leave to defend or to grant conditional or unconditional leave to defend is a discretion akin to Joseph's multi-coloured coat - a large number of baffling alternatives present themselves."

Core principles established:

• The issuance of cheques implies a presumption of a legally enforceable debt, which the drawer must rebut.
• The absence of a Section 138 complaint does not negate the civil liability for recovery of the debt.
• A defense lacking substantiation and failing to raise genuine triable issues is deemed frivolous and does not warrant leave to defend.

Final determinations on each issue:

• The appellant's application for leave to defend was correctly dismissed as it did not present a substantial defense or genuine triable issues.
• The defense of coercion was unsupported by evidence and thus considered frivolous.
• The presumption of a legally enforceable debt due to the issuance of cheques was upheld.