Summary suit on MOU and dishonoured cheques upheld; repayment obligation and civil recovery remained enforceable despite pending NI Act complaints.

A summary suit based on a memorandum of understanding and dishonoured cheques was upheld because the repayment obligation was expressly recorded, including a fixed repayment period and minimum guaranteed return. The Court treated the label of the transaction as investment or loan as immaterial, since the duty to repay was clear and part-payments reinforced liability. It also held that the suit was maintainable on the dishonoured cheques, including cheques issued as security but intended to be honoured on presentation. Pending complaints under the Negotiable Instruments Act did not justify leave to defend, as civil recovery and criminal proceedings were distinct; rejection of leave to defend and the decree for the balance amount were affirmed.

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Issues: Whether the application for leave to defend in the summary suit was rightly rejected and whether the decree under Order XXXVII of the Code was maintainable on the basis of the memorandum of understanding and dishonoured cheques.

Analysis: The liability to refund the amount and pay return on investment was expressly stipulated in the memorandum of understanding, including a fixed repayment period and minimum guaranteed return. The Court found that the characterisation of the payment as investment or loan was not decisive because the obligation to repay was clear. Part payments made by the appellant also supported the existence of liability. The suit was further maintainable on the basis of the dishonoured cheques, and cheques issued as security were nevertheless intended to be honoured on presentation. The pendency of complaints under Section 138 of the Negotiable Instruments Act did not justify leave to defend because the civil recovery proceedings and the criminal complaints were distinct.

Conclusion: The rejection of leave to defend was upheld and the decree for the balance amount was affirmed.

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