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TMI Blog2019 (8) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... he anvil of the contemporaneous record and conduct of the defendant. Undoubtedly the plaintiff placed on record the delivery challans after the defendant alleged that there were no documents to evidence the sale and delivery of the goods. However, this fact itself is not sufficient to jettison away the claim of the plaintiff. The fact that the suit was instituted on the basis of the dishonoured cheques cannot be lost sight of. The plaintiff may adduce evidence in proof of underlying transaction of sale and delivery of goods. However, in view of the presumption of law incorporated in Section 118 of the N. I. Act, the Court is enjoined to presume that the cheques were drawn for consideration - The defence raised by the defendant thus fall in the category of a defence which is plausible but improbable - the learned Judge rightly exercised the discretion to grant conditional leave upon deposit of the amount covered by the dishonoured cheques. Petition dismissed. - WRIT PETITION NO. 2297 OF 2018 - - - Dated:- 29-7-2019 - N.J. JAMADAR, J. Mr. Pradeep J. Thorat, for the Petitioner. Mr. Rajendersingh Saloja, for the Respondent. JUDGMENT : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, the plaintiff lodged a complaint against the defendant for the offence punishable under Section 138 of the Negotiable Instruments Act, 1881 ( the N. I. Act ) before the learned Metropolitan Magistrate, 20th Court, at Esplanade Mumbai. For enforcing the civil liability, the plaintiff also called upon the defendant to pay the amount covered by the dishonoured cheques by notice dated 27th January, 2015. Despite the said demand, the defendant committed default in payment of amount covered by the cheques. Hence, the plaintiff instituted the suit under Order XXXVII of the Code. (c) In the reply to the Summons for Judgment, the defendant contested the tenability of the suit on the grounds that Rakesh Rungta, the plaintiff, was not competent to institute the suit on behalf of the Rakesh Rungta, HUF and as the Proprietor of M/s. Shree Shyam Silk Mills and that the City Civil Court at Mumbai lacked the territorial jurisdiction to entertain, try and dispose of the suit. On merits, the defendant raised a bold defence that the defendant had purchased goods from the plaintiff under the first 15 bills from 21st January, 2012 to 11th December, 2012 and the defendant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon consideration of the material on record and submissions canvassed across the bar, in the backdrop of the principles which govern the grant of leave to defend in a summary suit, the learned Judge was persuaded to hold that the core of the defence of the defendant that the blank cheques were tendered for security only was an evasive and moonshine defence. However, since there was a doubt regarding the identity of the transporter through whom the goods were delivered, the learned Judge was persuaded to grant conditional leave to defend upon deposit of the sum of ₹ 49,95,217/ ; covered by the dishonoured cheques. Being aggrieved by and dissatisfied with the grant of conditional leave, the defendant has invoked the writ jurisdiction of this Court. 4. In the aforesaid setting of the matter, the question which wrenches to the fore is whether, in the backdrop of the material on record, the learned Judge, City Civil Court, justifiably exercised the discretion to grant conditional leave to defend upon deposit of the amount covered by the dishonoured cheques. 5. Mr. Thorat, the learned Counsel for the Petitioner urged that the learned Judge totally misconstrued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein, the defendant is entitled to an unconditional leave to defend. If the defendant discloses, prima facie, fair and a reasonable defence, ordinarily, the defendant is entitled to an unconditional leave. In contrast to this, if the defence raised by the defendant appears frivolous, false, or sham the leave to defend shall be refused, and the plaintiff is entitled to judgment. The controversy, however, arises in those matters where there is a doubt as to whether the defendant has raised a triable issue, and the nature of the conditions to be imposed, if the Court comes to the conclusion to grant conditional leave to defend. There is a significant development in law, especially as regards the grant of leave on the condition as to deposit of the amount in the Court. 8. A four Judge Bench of the Supreme Court in the case of Milkhiram (India) Private Ltd. and others vs. Chamanlal Bros. AIR 1965 Supreme Court 1698. had an occasion to deal with the question of exercise of discretion in granting leave to defend a suit in accordance with the provisions contained in Order XXXVII Rule 3(3), as amended by the Bombay High Court. The Supreme Court after analysis of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, stated the principles applicable to cases covered by Order 17 C.P.C. in the form of the following propositions (at p. 253): (a) If the defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend. (b) If the Defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend. (c) If the Defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shews such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff's claim the Plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year 1976. The Supreme Court noted that the judgment in the case of Mechelec (supra), in turn, adverts to the propositions expounded in Kiranmoyee Dassi's case (supra). The Supreme Court thereafter noticed the change in the provisions of Order XXXVII Rule 3, brought about in the year 1976, and concluded that the principles stated in paragraph 8 of the Mechelec's case (supra) would stand superseded in view of the amendment to Order XXXVII Rule 3 and binding decision of four Judges in Milkhiram's case (supra). The observations of the Court in paragraph 16, and restated propositions, formulated in paragraph 17, read as under: 16. It is thus clear that O.37 has suffered a change in 1976, and that change has made a difference in the law laid down. First and foremost, it is important to remember that Milkhiram case is a direct authority on the amended O.37 provision, as the amended provision in O.37 Rule 3 is the same as the Bombay amendment which this Court was considering in the aforesaid judgment. We must hasten to add that the two provisos to sub rule (3) were not, however, there in the Bombay amendment. These are new, and the effect to be given to them is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or furnishing security. Care must be taken to see that the object of the provisions to assist expeditious disposal of commercial causes is not defeated. Care must also be taken to see that such triable issues are not shut out by unduly severe orders as to deposit or security; 17.4 If the Defendant raises a defence which is plausible but improbable, the trial Judge may impose conditions as to time or mode of trial, as well as payment into court, or furnishing security. As such a defence does not raise triable issues, conditions as to deposit or security or both can extend to the entire principal sum together with such interest as the court feels the justice of the case requires. 17.5 If the Defendant has no substantial defence and/or raises no genuine triable issues, and the court finds such defence to be frivolous or vexatious, then leave to defend the suit shall be refused, and the plaintiff is entitled to judgment forthwith; 17.6 If any part of the amount claimed by the plaintiff is admitted by the defendant to be due from him, leave to defend the suit, (even if triable issues or a substantial defence is raised), shall not be granted unless the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant issued a reply to the said demand notice on 4th October, 2012. It is pertinent to note that the defence set up by the defendant that the transactions between the parties were limited to the bills at serial nos.1 to 15 and despite the payment of the price covered by those bills the plaintiff misused the custody of the cheques delivered by way of security, is conspicuous by its absence in the said reply dated 4th October, 2012. On the other hand, it was flatly denied that the plaintiff ever supplied any goods to the defendant. An endeavour was made in the said reply to demonstrate that the plaintiff never supplied any goods to the defendant and thus there was no question of payment of the price thereof by issuing the dishonoured cheques. 15. Undoubtedly the plaintiff placed on record the delivery challans after the defendant alleged that there were no documents to evidence the sale and delivery of the goods. However, this fact itself is not sufficient to jettison away the claim of the plaintiff. The fact that the suit was instituted on the basis of the dishonoured cheques cannot be lost sight of. The plaintiff may adduce evidence in proof of underlying transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X
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