2023 (6) TMI 1149 - HC - Indian Laws

Defendant granted conditional leave to defend with deposit requirement; Failure leads to ex-parte decree

The Court granted the Defendant conditional leave to defend, requiring a deposit of Rs. 50,00,000 within six weeks. If the deposit is made, the Suit will ... Dishonour of Cheque - rebuttal of presumption under Section 139 of the Negotiable Instruments Act - HELD THAT:- The Defendant having voluntarily handed over the said cheque duly signed, even assuming the same was blank would necessarily be liable in respect thereof. There is no doubt that the practice of handing over blank cheques is one which is attended with risks. The law is well settled that the presumption under Section 139 of the Negotiable Instruments Act would apply. Therefore, when a person voluntarily hands over a blank cheque he therefore accepts the risks of the consequences that may follow in doing so. The handing over of a blank cheque also presupposes (a) that the same was handed over for consideration and/or some benefit having been or to be received by the drawer and (b) the existence of a high level of faith and trust between the Parties. The Defendant therefore cannot be permitted to now raise defences that were not expressly taken at the time of the handing over of the said cheque, namely that the same was handed over only as security etc. Had this been the case, it was incumbent for the Defendant to have made this clear in writing at the time the cheque was handed over. Presumably the Defendant did not do so as monies were being lent and accepted in cash as is the case of the Plaintiff. While there is no doubt that the presumption under Section 139 of the Negotiable Instruments Act in this case arises, it is well settled that the same is a rebuttable presumption. Leave to defend the present Suit is granted to the Defendant subject to depositing a sum of Rs. 50,00,000/- within a period of six weeks from today - If the aforesaid deposit is made within the stipulated period, this Suit shall be transferred to the list of Commercial Causes and the Defendant shall file written statement within a period of six weeks from the date of deposit - Application disposed off. Issues Involved:1. Admissibility of the cheque and the presumption under Section 139 of the Negotiable Instruments Act.2. Validity of the Plaintiff's claim and the necessity of detailing the consideration in the Plaint.3. Defendant's entitlement to unconditional leave to defend the Suit.Summary:1. Admissibility of the cheque and the presumption under Section 139 of the Negotiable Instruments Act:The Plaintiff argued that the Defendant admitted his signature on the cheque, invoking the presumption under Section 139 of the Negotiable Instruments Act, supported by the Supreme Court judgment in Rangappa Vs. Sri Mohan. The Court agreed, noting that the Defendant admitted to executing and handing over the cheque, thus the presumption under Section 139 applied. The Court referenced Bir Singh vs Mukesh Kumar, affirming that even a blank cheque handed over voluntarily carries the presumption of a legally enforceable debt or liability.2. Validity of the Plaintiff's claim and the necessity of detailing the consideration in the Plaint:The Plaintiff claimed the cheque was issued for valuable consideration, and discrepancies in the cheque's amount were immaterial under Section 18 of the Negotiable Instruments Act. The Defendant contended there was no privity and no consideration was detailed in the Plaint. The Court found the Defendant's arguments unconvincing, highlighting contradictions in the Defendant's statements and the lack of detailed rebuttal in the Affidavit-in-Reply. However, the Court noted the Plaint lacked necessary details on when and how the consideration passed, and the Plaintiff's letter dated 8th April 2021 was unexplained.3. Defendant's entitlement to unconditional leave to defend the Suit:The Defendant sought unconditional leave to defend, arguing suppression of material facts and misuse of security cheques. The Court found the Defendant's contentions about the Plaintiff being a money lender and the cheque being issued as security untenable. However, the Court acknowledged the need for clarity on the consideration for the cheque and the increase in the amount from Rs. 1,95,00,000 to Rs. 2,25,00,000.Conclusion:The Court granted the Defendant conditional leave to defend, requiring a deposit of Rs. 50,00,000 within six weeks. If the deposit is made, the Suit will proceed to trial, and the Defendant must file a written statement. Failure to deposit will entitle the Plaintiff to seek an ex-parte decree. The Summons for Judgment was disposed of accordingly, and any Interim Application was deemed disposed of.