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TMI Blog2014 (2) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... ced and promised to repay the amounts and also to honour the cheques. The cheques were dishonoured upon presentation for "insufficient funds". The Plaintiffs, therefore, seek to recover the amounts with interest as aforesaid. The Plaintiffs rely upon both the dishonoured cheques as well as the letters, referred to above, for filing the suit as a Summary Suit. 3. The Defendant has filed a reply to the Summons for Judgment through one Manish Maru (who is said to be an authorised representative and to have filed the affidavit on the basis of the records available with the Defendant). The following defences have been raised by the Defendant in its reply: (i) The suit is not maintainable as a Summary Suit because there was a running account between the parties and the Plaintiffs could not pick up a few items from this running account to found a case under Order 37; (ii) The cheques issued were a mere collateral security or "comfort" and did not amount to a negotiable instrument; (iii) There was no valid presentment of the cheques for payment, as the signatory of the cheques had expired before such presentment; (iv) The signatory of the said cheques, one Amitabh Parekh, who was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions between the parties, apart from the suit transactions, the defence has no merit. As far as the present suit is concerned, the same is based on dishonoured cheques and not on any antecedent liability based on any account. The consideration for such cheques can very well be an account stated between the parties or some items in a running account. Because such consideration is based on an account between the parties, the suit based on dishonoured cheques cannot be termed as a suit on the basis of such account. In other words, a running account may well form a consideration of a negotiable instrument such as a cheque but the suit is still a suit on a negotiable instrument which is supported by a lawful consideration. The defence of running account is thus even not a statable defence to a suit filed on dishonoured cheques. 6. It is next contended by the Defendant that the cheques were merely a collateral security for repayment of the loan. The defence is merely illusory. One fails to see the significance of an alleged collateral security, which is not meant to be enforced. If a cheque is issued as a security to repay the amount, it would necessarily mean that in the event of non-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bombay Money Lenders Act, 1946 ("said Act"), a loan is defined under Section 2(9) of the said Act as follows: "(9) "loan" means an advance at interest whether of money or in kind but does not include- (a) a deposit of money or other property in a Government Post Office, Bank or in any other Bank or in a Company or with a Co-operative Society; (b).......... (c).......... (d)......... (cc)....... (d)........ (d1)....... (d2)........ (e)......... (ee) loan to, or by, or deposit with, anybody (being a body not falling under any of the other provisions of this clause), incorporated by any law for the time being in force in the States; (f) an advance, of any sum exceeding rupees three thousand made on the basis of a negotiable instrument as defined in the Negotiable Instruments Act, 1881, other than a promissory note; (f1) ....... (f2) ...an advance made bona fide by any person carrying on any business, not having for its primary object the lending of money if such advance is made in the regular course of his business." Section 2(17) of the said Act provides as follows : "2(17) "suit to which this Act applies" means any suit or proceeding- (a) for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) In a suit to which the said Act applies, it is difficult, if not impossible, to apply the procedure of Order 37; (iii) The defences that the suit transaction was a money lending transaction; that the amount was not kept as a deposit with the company, but a loan advanced to it; that the amount was not advanced on the basis of a negotiable instrument, may all give rise to triable issues, in which case an unconditional leave would ordinarily be granted. 10. The central question in our case, however, is whether the suit is for recovery of a loan. It is no doubt true that the amounts originally advanced were termed as short term loans. Though cheques were issued for return of the amounts, it is possible to argue that the advances themselves were not on the basis of negotiable instruments. The cheques were issued much after the advances were made. It is also possible to argue that the advances were not in the nature of deposits of money in a company. Had the suit been a suit for recovery of a loan, these defences would have given rise to triable issues. But the suit is based on dishounoured cheques. These cheques were issued towards refund of the loan. In other words, these were n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard to the discussion as above, none of the defences raised by the Defendant to the Summons for Judgment appears to be either substantial or bona fide. The defences can only be termed as illusory and moonshine. However, with a view to give an opportunity to the Defendant to prove his case at the trial and at the same time to protect the Plaintiffs, the Defendant can be appropriately granted leave to defend the suit on a condition of its depositing in the Court the principal amount of Rs. 67 crores claimed in the suit. 15. In the premises, the following order is passed: (i) The Defendant is granted leave to defend the suit on, and subject to, the condition of deposit of Rs. 67 crores in the Court within a period of eight weeks from today; (ii) On such deposit being made, the suit to be transferred to the list of commercial causes; (iii) Written Statement to be filed within a period of six weeks thereafter; (iv) The amount deposited by the Defendant may be invested by the Prothonotory and Senior Master of this Court in a fixed deposit in a Nationalized Bank initially for a period of two years and thereafter to be renewed from time to time till the disposal of the present sui ..... 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