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TMI Blog2015 (7) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... n in business causes a serious dent in the resources of not only the company which has lost its business and unable to reap, it causes serious hardship as much to the creditor who would depend on the regeneration of the amount lent by return of capital with interest. In this case, if the first defendant must have leave to defend that defense shall be possible only if the defendant furnishes security to the tune of 90% of the amount claimed in all the suits and the additional amount of Rs. 25 lacs towards cost and expenses for all suits and splitting it proportionately to the claims made in the previous suits. The security can be either by means of bank guarantee comprehensively for all the 8 suits or by means of immovable property. The property that is offered by the company shall be duly decided by the Court for its worth before its acceptance and if it is satisfied the Court assessment of the value for which the security is ordered the Court may allow for the defense to be given and take up the matter for trial. If the defendant company is unable to furnish security or offer guarantee in the manner directed the defense shall be struck off and the Court will proceed to consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel would also seek to defend the company s attempt to secure the impleadment of the auction purchaser by reference to Section 13 (7) under the SARFAESI Act. According to the counsel the auction purchaser holds the property purchased by him in trust to be applied firstly in the payment of cost, charges and expenses and secondly to the discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interest. The application of the residue for the benefit of the right and interest of the person entitled to the same would mean even an unsecured creditor and it will be only appropriate and proper that the plaintiff will have remedy against such a purchaser in the event of any decree. The attempt for impleadment is according to the defendant company a facilitative process for the plaintiff company to secure a surer method of assessment of its dues if there arises an excess after discharge of all other prior claims. In my view, none of the contentions merits acceptance. The suits are for enforcement of amounts covered through cheques issued admittedly by the company. By the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arding off any attempt of an auction purchaser to declare that there had been no warranty for good title. It is a notorious fact that auction purchases do not at all times secure the best market price. An auction purchaser shall at all times encounter various obstacles in realizing the secured asset and a clause allowing for the due diligence made by a person who offers to purchase through a tender, literally fetters himself to the benefit of the secured creditor that he will not vex the creditor with any further claims later as having been attached to the property purchased by him and that the creditor should undertake the liability in respect of such sum. This Clause could hardly be used by the debtor who had incurred the liability to plead that an auction purchaser shall become jointly liable for an unsecured liability of the unit of the debtor company. Assuming that such a liability exists for the auction purchaser which shall at all times be open to a creditor to either enforce his right against a co-obligant or he may, at his option, give up the claim against any such person. A law of joint liability in India is always joint and several and a creditor enjoys a full liberty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are two independent lines of defence. The CR No. 3804 and 3805 of 2013 are at the instance of the two of the Directors of the company. As regards one of them, it is claimed by the counsel appearing on behalf of the plaintiff respondent that he has himself entered into an agreement to discharge the loan of about Rs. 8.80 crores due and payable on account between the plaintiff and the defendant company. This agreement was not before the Court below but has been filed only before this court. The counsel appearing for the respondent himself admits that the suit claim is not for enforcement of the agreement or for the rights given under the agreement, but, the suit is for the enforcement of the amounts mentioned on the cheque. This document, according to him is used for the purpose of proof of the existence of liability by the defendant company and his undertaking to offer his own personal property for enforcement. So long as the money claim is itself not on the basis of an agreement and the suit under Order 37 is brought for enforcement of NI Act, by the very nature of things, the right cannot avail against any property and this has to be only for the enforcement of specified amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I would refer the matter to the trial Court again for considering the application for grant of leave and pass a reasoned order. The suit has been instituted in the year 2006 on cheques issued in the year 2005. The summary suit that the Civil Procedure Code contemplates is a suit that would head for summons for judgments on the 1st date of hearing if leave to defend is not granted. Such a consideration must be undertaken soon after a leave to defend is filed and before a summon for judgment is issued. If there was a defense and a leave was to be granted it should be soon after the application is filed before the 1st date of hearing and after hearing the objections from the plaintiff. In this case, there have been several obstructions all along the way. Several interim orders have been subject of revision before this Court. The application which was filed came to be decided after nearly 7 years and it has gathered dust for another couple of years before this Court. I would believe it to cause a very serious travesty or justice that the case must go back to the trial Court only for the consideration of whether leave to defend were to be granted or not and that it should give a consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant s defense raises a triable issue and that he has a fair, bona fide or reasonable defense, although not positively good defense. In both these cases, Hon ble the Supreme Court was holding affirming the rule laid down by the Calcutta High Court that the defense shall be unconditional. The defense which we have enumerated shall therefore be seen whether anything fair or bona fide to leave for an interference for us that the defendant will have such a benefit. Elsewhere in the same judgment we have seen that the suit is for enforcement of money claims under cheques issued by the defendant company admittedly. I have also adverted to the legal presumption available under Section 118 of NI Act. The transactions are not between rustic villagers or local persons who could plead for illiteracy. The transaction is between the company through executives. The transactions are not amounts in driblets but they represent large volume of business and high value claims. One would expect that the parties take responsibility for what they do with their eyes open. A company that issues cheques ought to take responsibility for what it does. When it gets an authorized signatory to act on its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssal of technical ground while the plaintiff would say it was comprehensively decided against the defendant herein. I may draw two presumptions against the defendant to be statutorily drawn and the status of parties, as people who are operating on high volume business are guided at all times through legally trained persons and drawing up documents knowing the legal implication. I would not allow for the defense without appropriate condition. There are other judgments on which the counsel appearing on behalf of the respondents on and which sets out the parameters for imposing conditions. In Defiance Knitting Industries Pvt. Ltd. Vs. Jay Arts, 2006 (4) RCR (Civil) 493, the Court set out three grounds that if the case raises a triable issue defense should be granted unconditionally, secondly, where the Court is satisfied that the fact disclosed does not indicate that the defendant has a substantial defense or it is frivolous it should again refused the leave to defend. In case where the Court entertains a due whether the defense is genuine or sham or whether it raises a triable issue, the Court may impose condition in granting the leave to defend. The same point has been reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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