Case Note & Summary
The respondent, M/s S.P. Fabritech, filed a summary suit (Regular Civil Suit No.58 of 2011) against the appellants, M/s Aarti InfraProjects Pvt. Ltd. and its directors, for recovery of Rs.4,80,000 based on a cheque (No.153009 dated 3.3.2009) drawn on ICICI Bank, Ramdaspeth Branch, Nagpur. The cheque was presented for encashment but was dishonoured on 4.3.2009 with the endorsement 'Insufficient Funds'. The plaintiff issued a statutory notice under the Negotiable Instruments Act, but the defendants failed to pay. The trial court decreed the suit on 25.2.2013, holding the defendants jointly and severally liable to pay Rs.4,80,000 with interest at 12% per annum from the date of suit till realization. The defendants appealed to the District Court (Regular Civil Appeal No.191 of 2013), which was dismissed on 24.2.2014. The defendants then filed a second appeal before the Bombay High Court, Nagpur Bench. The High Court, after hearing counsel, found that the defendants had not obtained leave to defend in the summary suit and that the cheque was dishonoured for insufficient funds. The court held that the presumption under Sections 118(a) and 139 of the Negotiable Instruments Act, 1881, that the cheque was issued for consideration, stood unrebutted. The court found no substantial question of law and dismissed the second appeal, upholding the concurrent findings of the lower courts.
Headnote
A) Negotiable Instruments Act - Dishonour of Cheque - Presumption of Consideration - Section 138, 139, 118(a) - The plaintiff filed a summary suit based on a cheque dishonoured for insufficient funds. The defendants did not obtain leave to defend. The trial court decreed the suit. The first appellate court dismissed the appeal. In second appeal, the High Court held that the presumption under Section 139 and Section 118(a) of the Negotiable Instruments Act, 1881, that the cheque was issued for consideration, stood unrebutted. The decree was upheld. (Paras 1-5) B) Civil Procedure Code, 1908 - Summary Suit - Order 37 - Leave to Defend - The defendants failed to apply for leave to defend within the stipulated time. Consequently, the plaintiff was entitled to judgment. The High Court found no substantial question of law to interfere with the concurrent findings. (Paras 1-5) C) Company Law - Liability of Directors - Joint and Several Liability - The directors of the company were held jointly and severally liable for the cheque amount as the cheque was issued on behalf of the company. The court upheld the decree against the directors. (Paras 1-5)
Issue of Consideration
Whether the judgment and decree passed in a summary suit based on a dishonoured cheque can be interfered with in second appeal when the defendants failed to obtain leave to defend and the cheque was dishonoured for insufficient funds.
Final Decision
Second appeal dismissed. The judgment and decree dated 25.2.2013 passed by the Third Joint Civil Judge Junior Division, Nagpur in Regular Civil Suit No.58 of 2011, as confirmed by the District Judge-12, Nagpur on 24.2.2014 in Regular Civil Appeal No.191 of 2013, is upheld. No order as to costs.
Law Points
- Negotiable Instruments Act
- 1881
- Section 138
- Section 139
- Section 118(a)
- presumption of consideration
- dishonour of cheque
- insufficient funds
- summary suit
- Order 37 CPC
- joint and several liability of directors
