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2021 (2) TMI 978 - HC - Indian LawsDishonor of Cheque - Seeking a decree of the amounts - Commercial Summary Suit under the provisions of Order XXXVII of the Code of Civil Procedure, 1908 - the advocates for the plaintiff sent a notice under section 138 of the Negotiable Instruments Act, 1881 to the defendant inter alia stating that the defendant had acknowledged the debt due and payable to the plaintiff and in case of failure to pay, the plaintiff would be constrained to initiate criminal action under section 138 of the said Act - failure on the part of Defendant to respond to the said notice or make repayment - HELD THAT - Though serving a notice under section 80 of the CPC is mandatory, the same is capable of being waived. Naturally, whether there is a waiver or not, would depend on the facts and circumstances of the case. In fact, the plea for want of notice under section 80, and which is a clear bar to the institution of proceedings against the Government or a public officer, must be taken at the earliest possible opportunity and must be specifically pleaded. Where such a plea is taken by the defendant at a very late stage of the suit and at a time when the plaintiff would be precluded by the law of limitation from bringing a further suit against the defendant, the defendant must be deemed to have waived the privilege of the notice. Having seen that the provisions of section 12A of the CC Act and section 80 of the CPC are similar, I do not see why on parity of reasoning, it cannot be held that in a given set of facts and circumstances, the defendant has waived the privilege of asking the plaintiff to first invoke the remedy of pre-institution mediation before instituting a suit in this Court. As mentioned earlier, without considering the facts and circumstances of a particular case, to mechanically drive the plaintiff to go for mediation under section 12A of the CC Act before allowing him to institute the suit, would in fact run counter to the very object and purpose for which the CC Act was brought into force. This interpretation, which is earlier held to sub-serve the ends of justice, would not in any event cause prejudice to the defendant. The present suit came to be lodged on 6th July, 2019. After the suit was filed, the writ of summons was served on the defendant and the plaintiff thereafter filed the above Summons for Judgement on 16th August, 2019. The defendant also filed an affidavit-in-reply dated 11th December, 2019 to the Summons for Judgment as well as an affidavit in sur-rejoinder dated 10th January, 2020 to rejoinder filed by the plaintiff on 18th December, 2019. At no point of time has the defendant ever raised the contention that the present suit cannot be instituted because the plaintiff has not invoked the remedy of pre-institution mediation as contemplated under section 12A of the CC Act. This argument is, for the first time, canvassed only across the Bar by Mr. Bookwala when it was argued on 9th December, 2020 and 11th December, 2020 - The scope and ambit of section 12A is not to defeat a just claim of the plaintiff. As mentioned earlier, section 12A is a procedural provision and it is well settled that procedure cannot defeat justice. I am, therefore, clearly of the view that in the facts of the present case, the plaintiff cannot be non-suited on this ground considering that the plea of requiring the plaintiff to invoke pre-institution mediation has not even been raised in the pleadings before me and is only argued across the Bar for the first time in December, 2020. The provisions of section 12A have been substantially complied with. As mentioned earlier, the scope and ambit of section 12A is to try and see if the parties can resolve their disputes before approaching the Court of law. If they cannot, then naturally the parties have to approach the Court for redressal of their grievances. In the facts of the present case, after the suit was filed, the parties did try to resolve their disputes. This is clear from the order passed by this Court on 4th November, 2020, wherein it was specifically recorded on behalf of the defendant that the defendant is desirous of sending a settlement proposal to the plaintiff to see if the disputes can be resolved. Such a proposal was, in fact, sent by the defendant to the plaintiff and which was rejected by the plaintiff. This would, therefore, clearly go to show that in the facts of the present case, the parties did try to resolve their disputes amicably, albeit after the filing of the suit, but without any success. There is no dispute whatsoever with reference to the merits of the claim of the plaintiff. From the facts narrated above, it is clear that the defendant had taken moneys from the plaintiff and has not repaid the same. In fact, the defendant, to repay the moneys advanced by the plaintiff to the defendant, had also issued a post-dated cheque of ₹ 5 crores which was dishonoured when presented for payment. Similarly, even the cheque issued for the payment of ₹ 54 lakhs (towards interest) was dishonoured. The reason for dishonour of both the aforesaid cheques was funds insufficient . There is also no dispute with reference to the rate of interest payable. When one looks at the overall facts of the matter, it is abundantly clear that the defendant has absolutely no defence on the merits of the claim of the plaintiff. The defendant shall deposit in this Court, a sum of ₹ 5.54 crores within a period of twelve weeks from today. On the aforesaid condition being complied with, the defendant is granted leave to defend the suit and he shall file his written statement within a period of eight weeks from the date of deposit - If the aforesaid condition of deposit is not adhered to within the stipulated time, the plaintiff shall be entitled to apply for an ex-parte decree after obtaining a non-deposit certificate from the Prothonotary Senior Master of this Court. Summons disposed off.
Issues Involved:
1. Decree for the sum of ?5,54,00,000/- and interest. 2. Suit filed under Order XXXVII of the CPC based on dishonoured cheques. 3. Defendant's request for a reduction in the interest rate. 4. Defendant's failure to respond to the notice under section 138 of the Negotiable Instruments Act, 1881. 5. Defendant's arguments regarding the suit being barred by the Maharashtra Money Lending (Regulation) Act, 2014. 6. Defendant's arguments regarding non-compliance with section 12A of the Commercial Courts Act, 2015. 7. Defendant's arguments regarding non-compliance with certain provisions of the CPC. Issue-wise Detailed Analysis: 1. Decree for the sum of ?5,54,00,000/- and interest: The plaintiff sought a decree against the defendant for ?5,54,00,000/- along with ?1,49,75,342.47 towards interest calculated at 12% per annum from 1st January 2017 to 30th June 2019, aggregating to ?7,03,75,342.47, and further interest at 12% p.a. from the date of filing of the suit till payment and/or realization. The suit was based on two dishonoured cheques issued by the defendant. 2. Suit filed under Order XXXVII of the CPC based on dishonoured cheques: The suit was filed as a Commercial Summary Suit under the provisions of Order XXXVII of the CPC. The plaintiff had issued a loan of ?5 Crores to the defendant, who acknowledged the loan and issued two post-dated cheques for repayment. Both cheques were dishonoured due to "Funds Insufficient." 3. Defendant's request for a reduction in the interest rate: The defendant requested a reduction in the interest rate from 19% p.a. to 12% p.a. in December 2016. The plaintiff agreed, and the defendant issued two post-dated cheques for repayment. The cheques were dishonoured when presented for payment. 4. Defendant's failure to respond to the notice under section 138 of the Negotiable Instruments Act, 1881: The plaintiff sent a notice under section 138 of the Negotiable Instruments Act to the defendant after the cheques were dishonoured. The defendant failed to respond or make repayment, leading to the filing of the present suit. 5. Defendant's arguments regarding the suit being barred by the Maharashtra Money Lending (Regulation) Act, 2014: The defendant argued that the suit was barred by section 13(1) of the Maharashtra Money Lending (Regulation) Act, 2014, as the plaintiff was a "Money Lender" without a valid license. The court found no substance in this argument, stating that the suit was based on dishonoured cheques and not on the antecedent transaction of the loan. The court also noted that the money advanced by the plaintiff could not be termed as a "loan" under the Act. 6. Defendant's arguments regarding non-compliance with section 12A of the Commercial Courts Act, 2015: The defendant argued that the suit was barred for non-compliance with section 12A of the Commercial Courts Act, 2015, which requires pre-institution mediation. The court held that section 12A is a procedural provision and that substantial compliance with the provision is sufficient. The court found that the parties had tried to resolve their disputes amicably after the suit was filed, and therefore, the plaintiff could not be non-suited on this ground. 7. Defendant's arguments regarding non-compliance with certain provisions of the CPC: The defendant argued that the plaint did not comply with Rule 2-A of Order VII of the CPC, as it was silent on the mode and manner in which the interest was to be calculated. The court found this argument to be fallacious, stating that the claim for interest was made at the agreed rate of 12% p.a. on the sum of ?5 Crores and not ?5.54 Crores. Conclusion: The court found that the defendant had no defense on the merits of the claim and allowed the Summons for Judgment, granting conditional leave to the defendant to file a written statement and contest the suit. The defendant was ordered to deposit ?5.54 crores within twelve weeks, failing which the plaintiff could apply for an ex-parte decree.
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