Summary suit granted for dishonored cheques under Order XXXVII, interest claim allowed under NI Act, deposit required.

The court found the summary suit maintainable under Order XXXVII as it was based on dishonored cheques, falling within the scope of negotiable instruments. The claim of interest without a written contract was deemed permissible under section 80 of the NI Act. Conditional leave to defend was granted, with defendants required to deposit the admitted principal amount of Rs.96,03,766 as a pre-condition. The court upheld the trial court's decision, dismissing the defendants' petition and modifying the order to mandate the deposit of the entire principal amount.

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Issues Involved:
1. Maintainability of the summary suit under Order XXXVII of the Code of Civil Procedure, 1908.
2. Claim of interest without a written contract.
3. Conditional leave to defend granted by the trial court.
4. Admission of the principal amount by the defendants.
5. Requirement to deposit the admitted amount as a pre-condition for leave to defend.

Detailed Analysis:

1. Maintainability of the Summary Suit:
The plaintiff filed a summary suit for the recovery of Rs.96,03,766/- along with interest. The defendants contended that the suit does not fall within the ambit of Order XXXVII of the Code since the claim of interest was not based on a written contract. The court examined the provisions of Order XXXVII rule 1(2) and noted that the suit was based on dishonoured cheques, which are negotiable instruments under section 6 of the Negotiable Instruments Act, 1881. The court held that the suit was maintainable as it was instituted upon bills of exchange (cheques), and the claim of interest was supported by section 80 of the NI Act.

2. Claim of Interest Without a Written Contract:
The defendants argued that the claim for interest at 24% per annum was not backed by any written contract and thus could not be part of a summary suit. The court referred to previous judgments, including Zonal Manager v. Akhilbhai B. Mehta and Chlochem Limited v. Lifeline Industries Limited, which held that claims for interest without a written contract take the suit out of the ambit of Order XXXVII. However, the court distinguished these cases, noting that the present suit was based on negotiable instruments and that section 80 of the NI Act allows for interest even without a specific agreement. The court concluded that the claim of interest did not take the suit outside the scope of Order XXXVII.

3. Conditional Leave to Defend Granted by the Trial Court:
The trial court granted conditional leave to defend, requiring the defendants to deposit Rs.50,00,000/-. The defendants challenged this, arguing that triable issues arose, and the trial court should have granted unconditional leave. The court noted that the defendants' primary defense was an alleged MOU, which was not produced in court, and the trial court found this defense to be moonshine and sham. The court upheld the trial court's decision to grant conditional leave to defend, emphasizing that the principal amount was undisputed and the claim for interest was statutorily supported.

4. Admission of the Principal Amount by the Defendants:
The court observed that the defendants admitted the principal amount of Rs.96,03,766/- as due and payable. This admission was crucial in determining the conditions for leave to defend. The court noted that the defendants' admission of the principal amount made it mandatory for them to deposit the admitted amount as a pre-condition for leave to defend under the second proviso to rule 3(5) of Order XXXVII of the Code.

5. Requirement to Deposit the Admitted Amount:
The court held that the trial court erred in directing the defendants to deposit only Rs.50,00,000/- instead of the entire admitted principal amount of Rs.96,03,766/-. The court emphasized that the second proviso to rule 3(5) of Order XXXVII mandates the deposit of the admitted amount as a pre-condition for leave to defend. Consequently, the court modified the trial court's order, requiring the defendants to deposit the entire principal amount.

Conclusion:
The court dismissed the defendants' petition (Special Civil Application No.8601/2013) and upheld the trial court's decision to grant conditional leave to defend. The court allowed the plaintiff's petition (Special Civil Application No.17153/2013), modifying the trial court's order to require the defendants to deposit the entire principal amount of Rs.96,03,766/-. The operation of the judgment was stayed for ten weeks to allow the defendants to seek further remedies.

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