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of <h1>Court rules in favor of Plaintiff in loan repayment case, rejecting investment argument and dismissing consent requirement for cheques.</h1> <h3>Tiscon Realty Private Limited Versus C.G. Edifice, Ajay Jagannath Thakur, Shyam Kumar Shah,</h3> The court found in favor of the Plaintiff in a Summary Suit seeking repayment of a loan amounting to Rs. 1,47,64,000/- along with interest. The ... Dishonour of Cheque - Insufficient Funds - issuance of cheque for investment or repayment of loan - inadvertent mention of names in the cheque - HELD THAT:- The fact that the name of Manish Bhawani was inadvertently been mentioned is evident from the fact that the name of Tejal V. Bhawani was mentioned on the last page and was to be executed by Vipul Bhawani and Tejal Bhavani. Thus, the Defendants’ contention that the letter has been fraudulently altered by the Plaintiff is patently false. Most importantly the said letter also refers to the said cheques in Annexure A as being issued for repayment of loan. The defences raised by the Defendants are really frivolous and/or vexatious. Even Exhibit C to the Affidavit-in- Reply which the Defendants contend is the agreement between the parties makes reference to the cheques set out in Annexure A thereto as being repayment of loan and not investment. Thus, it is clear that the Defendants at all times had agreed to treat the said cheques as being repayment towards loans and not investments. Additionally, as has been held in the case of MOTILAL LAXMICHAND SALECHA, HUF VERSUS M/S. MOUR MARBLES INDUSTRIES PVT. LTD. & ORS. [2018 (4) TMI 1950 - BOMBAY HIGH COURT] that once a party issues a cheque for repayment of a loan, then the liability under the loan is substituted by the liability to honor the cheque and in a sense the original liability to pay the loan is discharged by means of execution of cheque. And in the event such cheque is not honored, a new liability arises under the provisions of the Negotiable Instruments Act. In the present case, the Defendants have not denied issuance of the said cheques but have only attempted to contend that the same were for return of investments and not loans. That argument is not open to the Plaintiff anymore in view of the ratio laid down in the case of Motilal Laxmichand Salecha HUF. Thus even on merit the Defendants’ contentions are untainable and devoid of merit. Since there was no contract as regards the rate at which the interest was to be charged on the said amount of Rs. 1,47,64,000/-, it would be justifiable to apply the interest at 12% per annum from 31st December, 2019, the date on which the cheques drawn by the Defendants in favour of the Plaintiff were payable. Defendants to pay the Plaintiff sum of Rs. 1,47,64,000/- along with interest at 9% per annum on the sum of Rs. 1,47,64,000/- from 31st December, 2019 till realization - suit decreed. Issues Involved:1. Whether the transaction between the parties was a loan or an investment.2. Whether the cheques were to be deposited only with the prior concurrence of the Defendants.3. Whether the letter dated 10th October 2019 was fraudulently altered.Summary:1. Nature of Transaction:The Plaintiff filed a Summary Suit seeking a decree for Rs. 1,70,93,880/- based on the dishonor of six cheques issued by the Defendants. The Plaintiff claimed the amount was a loan extended to the Defendants' construction business, which the Defendants agreed to repay with compensation, as per a letter dated 10th October 2019. The Defendants argued that the transaction was an investment, not a loan, and thus fell outside the scope of Order 37 of the CPC. The Court found that even the letter produced by the Defendants referred to the cheques as repayment of a loan, thus rejecting the Defendants' contention.2. Deposit of Cheques:The Defendants contended that the cheques were to be deposited only with their prior consent, which the Plaintiff did not obtain. The Court noted that the Plaintiff had deposited the cheques without the Defendants' consent, but this did not absolve the Defendants of their liability, especially since the cheques were issued for repayment of a loan.3. Alleged Fraudulent Alteration:The Defendants claimed that the letter dated 10th October 2019 was fraudulently altered by the Plaintiff. They produced an 'original letter' which had different details. The Court found that the Defendants made a false statement on oath regarding their knowledge of Tejal V. Bhawani, whose name appeared in both versions of the letter. This false statement led the Court to reject the Defendants' claim of fraudulent alteration.Conclusion:The Court, after considering the submissions and evidence, found that the Defendants had no valid defense and had made false statements on oath. The Court decreed the suit in favor of the Plaintiff for Rs. 1,47,64,000/- along with 9% interest per annum from 31st December 2019 till realization. The Plaintiff was also entitled to a refund of court fees, and the decree was ordered to be drawn up and sealed expeditiously.
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