Case Note & Summary
The plaintiffs, M/s. Ashok Commercial Enterprises and another, filed a summary suit against Parekh Aluminex Limited for recovery of Rs. 68,37,96,666/- comprising principal of Rs. 67 crores and interest at 12% p.a. The plaintiffs alleged that they had given short-term loans aggregating to Rs. 67 crores to the defendant for business purposes, which were credited via RTGS. The defendant issued cheques totalling Rs. 67 crores towards repayment and also sent letters acknowledging the loans and promising to honour the cheques. Upon presentation, the cheques were dishonoured for 'insufficient funds'. The plaintiffs sought to recover the amounts based on the dishonoured cheques and the acknowledgment letters. The defendant filed a reply to the summons for judgment through an authorised representative, raising several defences: (i) the suit was not maintainable as a summary suit because there was a running account between the parties and the plaintiffs could not pick a few items to found a case under Order 37; (ii) the cheques were mere collateral security or 'comfort' and not negotiable instruments; (iii) there was no valid presentment because the signatory of the cheques, Amitabh Parekh, had died before presentment; (iv) the signatory was unwell from September 2012, admitted to hospital in critical condition on 14 December 2012, and died on 6 January 2013, and the defendant suspected that the signatures on the documents relied upon by the plaintiffs might have been obtained under suspicious circumstances. The court considered whether these defences raised triable issues entitling the defendant to unconditional leave to defend. The court noted that under Order 37, if the defendant discloses a fair or bona fide defence or raises triable issues, leave to defend must be granted. The court found that the defences regarding the running account, the cheques being collateral security, and the validity of presentment due to the signatory's death were triable issues. The court also noted that the defendant's reply was based on records and the deponent had personal knowledge of the facts. Accordingly, the court granted unconditional leave to defend to the defendant, allowing the suit to proceed to trial. The court directed the defendant to file a written statement within four weeks and set the suit for discovery and inspection.
Headnote
A) Civil Procedure - Summary Suit - Leave to Defend - Order 37 of Code of Civil Procedure, 1908 - Triable Issues - Defendant raised defences of running account, cheques as collateral security, and invalid presentment due to signatory's death - Court held that these defences raise triable issues and granted unconditional leave to defend - Held that where defendant discloses a fair or bona fide defence or raises triable issues, leave to defend must be granted (Paras 4-10).
Issue of Consideration
Whether the defendant has raised triable issues entitling it to unconditional leave to defend in a summary suit for recovery of loan based on dishonoured cheques.
Final Decision
The court granted unconditional leave to defend to the defendant. The defendant is directed to file a written statement within four weeks. The suit is set down for discovery and inspection.
Law Points
- Summary suit under Order 37 CPC
- Triable issues
- Leave to defend
- Dishonoured cheques
- Running account
- Collateral security
- Validity of presentment
