Case Note & Summary
The plaintiff, SKS Power Generation (Chhattisgarh) Ltd, filed a Commercial Summary Suit against Canara Bank for recovery of Rs. 1,00,00,000/- with interest. The plaintiff had furnished a bank guarantee issued by the defendant bank in favor of the Chhattisgarh State Power Transmission Company Ltd. Upon invocation of the guarantee, the bank issued a cheque dated 31st March 2020 for Rs. 1,00,00,000/- in favor of the plaintiff. The cheque was dishonoured on presentation with the remark 'payment stopped by drawer'. The plaintiff filed the suit under Order XXXVII CPC. The defendant bank sought leave to defend, contending that the cheque was not signed on the reverse side and that the plaintiff had not complied with certain conditions. The court held that the defence was not triable and allowed the summons for judgment, decreeing the suit in favor of the plaintiff.
Headnote
A) Civil Procedure - Summary Suit - Order XXXVII CPC - Triable Issue - The court considered whether a defence that the cheque lacked the drawer's signature on the reverse side constitutes a triable issue. Held that the absence of signature on the reverse of a cheque is not a valid defence under the Negotiable Instruments Act, 1881, as the signature on the face is sufficient. The bank's defence was held to be moonshine and not raising a triable issue. (Paras 1-22) B) Banking Law - Bank Guarantee - Invocation - The plaintiff invoked a bank guarantee issued by the defendant bank. The bank dishonoured the cheque issued towards the guarantee amount. The court held that the bank's obligation under the guarantee is independent and must be honoured. (Paras 1-22) C) Commercial Law - Summary Judgment - Commercial Courts Act, 2015 - The court, exercising its commercial division jurisdiction, allowed the summons for judgment and decreed the suit in favor of the plaintiff for the principal amount with interest. (Paras 1-22)
Issue of Consideration
Whether the defendant bank has raised a triable issue entitling it to unconditional leave to defend in a summary suit for recovery of money based on dishonour of a cheque issued by the bank.
Final Decision
The court allowed the Summons for Judgment and decreed the suit in favor of the plaintiff for the principal amount of Rs. 1,00,00,000/- with interest at the rate of 9% per annum from the date of the suit until payment, with costs.
Law Points
- Order XXXVII CPC
- Summary Suit
- Triable Issue
- Defence
- Cheque Dishonour
- Bank Guarantee
- Signature on Reverse of Cheque
- Commercial Court
