Case Note & Summary
The petitioner, Navnath R. Adak, was the defendant in Summary Suit No. 464 of 2015 filed by the respondent, Rakesh Giridharilal Rungta, under Order XXXVII of the Code of Civil Procedure, 1908. The suit was based on 27 cheques drawn by the defendant on NKGSB Bank, Parel Branch, payable between 26th March 2012 and 18th April 2012, aggregating to Rs. 49,95,270/-, which were dishonoured upon presentation. The plaintiff claimed that the defendant had placed orders for textiles and the plaintiff sold and delivered goods under 59 bills. The defendant filed a summons for judgment and sought leave to defend, contending that the cheques were given as security and not towards any existing debt, and that the plaintiff had failed to prove the delivery of goods. The learned City Civil Court Judge, by order dated 27th July 2017, granted leave to defend on condition that the defendant deposit the entire suit amount of Rs. 49,95,270/- within two months. Aggrieved, the defendant filed the present writ petition under Article 227 of the Constitution of India. The High Court examined the principles governing leave to defend in summary suits. It noted that the defendant's defence that the cheques were given as security was not supported by any contemporaneous document or evidence. The court also observed that the defendant did not rebut the presumption under Sections 118 and 139 of the Negotiable Instruments Act, 1881, that the cheques were issued for consideration. The court found that the defence raised was not bona fide and did not disclose any triable issue. Consequently, the condition of deposit was not unreasonable or disproportionate. The High Court dismissed the petition, upholding the trial court's order. The court held that the trial court had exercised its discretion judiciously and the condition was justified to protect the plaintiff's interest.
Headnote
A) Civil Procedure - Summary Suit - Leave to Defend - Order XXXVII of Code of Civil Procedure, 1908 - The court considered whether the trial court correctly imposed a condition of deposit of the entire suit amount while granting leave to defend. Held that the defendant failed to raise a bona fide defence or a triable issue, and the condition was justified as the defence appeared to be a mere delaying tactic. (Paras 1-20) B) Negotiable Instruments - Dishonour of Cheques - Burden of Proof - Sections 118 and 139 of Negotiable Instruments Act, 1881 - The court noted that the cheques were dishonoured and the defendant did not rebut the presumption of consideration. The defence that the cheques were given as security and not for discharge of debt was not substantiated. (Paras 10-15) C) Civil Procedure - Conditional Leave to Defend - Proportionality - Order XXXVII Rule 3 of Code of Civil Procedure, 1908 - The court examined whether the condition of depositing the full suit amount was proportionate. Held that since the defendant's defence lacked bona fides and no triable issue was raised, the condition was not unreasonable. (Paras 16-20)
Issue of Consideration
Whether the learned City Civil Court Judge erred in granting leave to defend the summary suit on condition of depositing the entire suit amount, and whether such condition was unreasonable or disproportionate.
Final Decision
The High Court dismissed the writ petition, upholding the order of the City Civil Court granting leave to defend on condition of depositing the entire suit amount of Rs. 49,95,270/- within two months.
Law Points
- Order XXXVII CPC
- Summary Suit
- Leave to Defend
- Conditional Leave
- Bona Fide Defence
- Triable Issue
