AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1
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...., based on 27 cheques allegedly drawn by the defendant aggregating to Rs. 49,95,270/­, on NKGSB Bank, Parel Branch, payable on various dates, falling between 26th March, 2012 to 18th April, 2012, which were dishonoured on presentment to the drawee bank. (b) It is the case of the plaintiff that the plaintiff deals in the business of manufacture and sale of textiles under name and style of Shri. Shyam Silk Mills. The defendant also deals in the business of textiles under name and style of M/s. Vinayaka Syntex. The defendant had placed orders for supply of the goods. The plaintiff had sold and delivered the goods to the defendant under 59 bills for the aggregate price of Rs. 68,71,361/­. The defendant used to pay the price of the goods by way of account payee post-­dated cheques or demand draft, within a period of 30 days from delivery. It was agreed between the parties that in the event of default the defendant would pay the amount with interest at the rate of 24% from due date of the bills. The defendant did pay the price of the goods covered by first 15 bills i.e. Rs. 16,98,970/­. However, the cheques drawn by the defendant towards payment of the price of t....
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....ds. In fact, the defendant does not carry on the business at Dadar and hence there was no question of delivery of the goods at Dadar, as falsely claimed by the plaintiff. It was contended that there was discrepancy in the amount shown to be outstanding against the defendant in the notices issued by the plaintiff on 10th July, 2012 (Rs. 56,62,429/­) and 27th January, 2015 (Rs. 51,72,391/­). Since the defendant had discharged the liability towards the price of the goods sold and delivered under bills at serial nos.1 to 15, and there were no further transactions between the plaintiff and defendant, there was no occasion for issuance of cheques in question. As the plaintiff allegedly misused the custody of blank signed cheques and instituted the suit on the basis of forged and fabricated documents, the defendant prayed for an unconditional leave to defend the suit. (e) By way of an Affidavit-­in-­rejoinder the plaintiff controverted the allegations made by the defendant in the Affidavit-­in-­reply. Since the defendant had contended that there was no evidence of sale and delivery of the goods, copies of the delivery challans were placed on record. Though....
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....ces, according to the learned Counsel for the petitioner, the learned Judge committed a grave error in granting conditional leave, in the nature of deposit of the entire amount covered by the dishonoured cheques. 6. Per contra, Mr. Saloja, the learned Counsel for the respondent stoutly submitted that the grant of conditional leave by the learned Judge is impeccable. The defendant has, in fact, no defence. The claim that the defendant had delivered blank signed cheques and the plaintiff misused the custody thereof is palpably false. The material on record brings out the shallowness of the said defence. According to the learned Counsel for the respondent, the contemporaneous conduct of the defendant militates against the said defence of misuse of custody of blank signed cheques. It was further urged that having conceded the fact that the plaintiff had delivered the goods under the bills at serial nos.1 to 15 and the defendant had paid the price thereof, it does not stand to reason that the defendant would not have taken any steps after the transactions were concluded and still the plaintiff allegedly retained the custody of blank signed cheques. Thus, the learned Judge was justifi....
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....tertain a genuine doubt on the question as to whether the defence is genuine or sham or in other words whether it raises a triable issue or not. It is to meet such cases that the amendment to O.37, R.2 made by the Bombay High Court contemplates that even in cases where an apparently triable issue is raised the Judge may impose conditions in granting leave to defend. Thus this is a matter in the discretion of the trial Judge and in dealing with it, he ought to exercise his discretion judiciously. Care must be taken to see that the object of the rule to assist the expeditious disposal of commercial causes to which the order applies, is not defeated. Care must also be taken to see that real and genuine triable issues are not shut out by unduly severe orders as to deposit. In a matter of this kind, it would be undesirable and inexpedient to lay down any rule of general application." (emphasis supplied) 9. In the case of M/s. Mechelec Engineers & Manufacturers vs. M/s. Basic Equipment Corporation (1976) 4 SCC 687., wherein also the summary suit was instituted on the strength of a cheque drawn towards the price of the goods sold and delivered, the Supreme Court, in the backdrop of ....
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....ition to deposit an amount in Court before proceeding further is justifiable." 10. The learned Counsel for the petitioner placed reliance on a judgment of the Supreme Court in the case of State Bank of Hyderabad vs. RABO Bank (2015) 10 Supreme Court Cases 521., wherein, after adverting to the often quoted propositions enunciated in the case of Kiranmoyee Dassi v. J. Chatterjee AIR 1949 Cal. 479., the Supreme Court culled out the legal position as under: "17. An analysis of the above principles makes it clear that in cases where the defendant has raised a triable issue or a reasonable defence, the defendant is entitled to unconditional leave to defend. Leave is granted to defend even in cases where the defendant upon disclosing a fact, though lacks the defence but makes a positive impression that at the trial the defence would be established to the plaintiff's claim. Only in the cases where the defence set up is illusory or sham or practically moonshine, is the plaintiff entitled to leave to sign judgment." 11. As against this, the learned Counsel for the respondent placed a strong reliance upon a judgment of the Supreme Court in the case of IDBI Trusteeship Servi....
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.... cases which present a substantial defence. At the other end of the spectrum are frivolous or vexatious defences, leading to refusal of leave to defend. In between these two extremes are various kinds of defences raised which yield conditional leave to defend in most cases. It is these defences that have to be guided by broad principles which are ultimately applied by the trial Judge so that justice is done on the facts of each given case. 17. Accordingly, the principles stated in paragraph 8 of Mechelec's case will now stand superseded, given the amendment of Order 37 Rule 3, and the binding decision of four judges in Milkhiram's case, as follows: 17.1 If the defendant satisfies the Court that he has a substantial defence, that is, a defence that is likely to succeed, the plaintiff is not entitled to leave to sign judgment, and the defendant is entitled to unconditional leave to defend the suit; 17.2 If the defendant raises triable issues indicating that he has a fair or reasonable defence, although not a positively good defence, the plaintiff is not entitled to sign judgment, and the defendant is ordinarily entitled to unconditional leave to defend; ....
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.... did not place on record the copies of the delivery challans in respect of the admitted transactions, represented by bills at serial nos.1 to 15, so as to indicate the place where the delivery of goods thereunder was made, and compare and contrast them with the disputed delivery challans, which were stated to be forged and fabricated. As indicated above, the learned Judge, was however persuaded to grant the conditional leave as there was a doubt regarding the identity of the transporter and discrepancy regarding the outstanding amount claimed in two notices issued by the plaintiff to the defendant. 13. The aforesaid approach of the learned Judge does not appear to be unjustifiable. The defence set up by the defendant is required to be appreciated in the backdrop of the fact that there is no qualm over the fact that there were transactions of sale and delivery of the goods between the plaintiff and defendant. It is indisputable that the plaintiff delivered the goods and defendant paid for the price of the bills at serial nos.1 to 15. Thus, the quality of defence of misuse of blank signed cheques needs to be evaluated on the anvil of the contemporaneous record and conduct of th....