*1* sj.201.10 kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUMMONS FOR JUDGMENT NO.201 OF 2010 IN SUMMARY SUIT NO.1244 OF 2010 Sheth Developers Pvt.Ltd.. ..Plaintiffs -Versus- Ashish C. Shah and another. ..Defendants .......... Mr.F.E.D’Vetre, Senior Counsel a/w Vishwajeet Sawant i/b Raju M. Yamgar, for the Plaintiffs. Mr.Rohit Kapadia, Senior Counsel a/w H.V.Chande, for the Defendants. .......... CORAM : S.C.DHARMADHIKARI, J. DATE : 08th October, 2010. P.C. 1 The Plaintiffs by this Summons for Judgment seek a judgment in their favour and against the Defendants in the sum of Rs. 34,42,50,000/- as payable on 12.04.2010 as per the particulars of claim annexed at Exhibit-G to the plaint along with further interest. 2 The Plaintiffs have filed this suit under Order-XXXVII of the Civil Procedure Code particularly invoking Rule-2(1)(a) thereof. It is their case that the suit claim is based on dishonour of a cheque. It is stated that the Plaintiff is a Company registered under the Indian Companies Act, 1956 having its registered office at the address mentioned in the cause title. The Plaintiffs are engaged in the business of land development and construction since last 25 years. They have undertaken various projects and have high reputation and goodwill in the market. 3 The Defendants are husband and wife and are residing in *2* sj.201.10 Mumbai. 4 It is stated that the Plaintiffs were desirous of developing and constructing a township project within Special Economic Zone (SEZ) in and around Panvel, District Raigad. Therefore, the Plaintiffs contacted one broker Mr.Virendra Bhavanji Gala of M/s Mahavir Estate Agency to identify a piece of land for development of the township project. The said Virendra Gala introduced the Plaintiffs to both the Defendants and the Defendants claimed that they are the landowners of vast tracts of lands in and around Panvel. The Defendant No.1 represented that their land is ideal and suitable for development of township project. The Defendant No.1 further represented that both the Defendants do not have means and capacity to develop the said land single-handedly, therefore, they are willing to associate themselves with the project and to undertake the development of the said land jointly, with the Plaintiffs. It is stated that the Defendant No.2 was also present during the course of this discussion. 5 It is further stated that the Defendants had acquired about 200 acres of land in certain villages in Panvel taluka and therefore, they were also interested in acquiring further lands in these villages. Thus, they stated that they would be in position to give clear, marketable and adequate title of 200 acres of land. 6 In such circumstances, the Plaintiffs state that they were induced to invest huge sum of money and therefore, on the Defendants’ request the Plaintiffs advanced a sum of Rs.25 crores. This was an advance sum for the purpose of purchase of the lands in the subject villages. It was agreed that this was token sum and if the deal did not materialize, the Defendants will return the said sum with interest @ 18% per annum. Therefore, the sum of Rs.25 crores was advanced by a cheque, the details of which are set out in paragraph No.6 of the plaint. This *3* sj.201.10 cheque was duly credited in the Defendants’ bank account. 7 It is stated by the Plaintiffs that, thereafter, inspection of the documents produced by the Defendants revealed that they have no clear, marketable title to the lands and there were encumbrances in some portions. In such circumstances, it was clear that the deal will not go through. Therefore, it was decided that the token amount will be refunded by the Defendants. Paragraph Nos.8 and 9 of the plaint read thus:- “8. The Plaintiff states that as agreed between the parties for the repayment of the said amount of Rs.25,00,00,000/- (Rupees Twenty Five Crores only) along with interest due and payable thereon, the Defendant No.1 issued and handed over a cheque dated 7th January, 2009 bearing No. 937227 of Rs.25,00,00,000/- (Rupees Twenty Five Crores Only) drawn on the Defendants joint account maintained with Indian Overseas Bank, Wadala Branch 20/9, Arihant, Rafi Ahmed Kidwai Road, Mumbai-400031 (which cheque for the sake of brevity and convenience herein after referred to as “the said cheque”) in favour of the Plaintiff (which bank account for the sake of brevity and convenience is hereinafter referred to as “the said bank account”). The said cheque was signed by the Defendant No.1. The Defendant No.1 orally requested the Plaintiff not to deposit the same till 30th January 2009 on the ground that up to 30th January, 2009 the Defendant would pay interest on the said amount to the Plaintiff as the Defendants did not have the requisite balance/liquidity to return the amount of Rs.25,00,00,000/- (Rupees Twenty Five Crores Only). The Plaintiff had therefore not deposited the said cheque dated 07.01.2009 immediately and were to deposit it on 30.01.2009. However, on 30.01.2009, the Plaintiff received a letter from the Defendants requesting it to deposit the said cheque issued by them, on 05.02.2009, and that immediately thereafter they would sit together and decide on the liability of interest. Hereto annexed and marked as Exhibit “A” is a copy of the letter received by the Plaintiff from the Defendants on 30.01.2009. Thereafter a meeting was held on 31.01.2009 between the Managing *4* sj.201.10 Director of the Plaintiff and the Defendants, when it was agreed that Defendants would pay to the Plaintiff interest on the above said sum of Rs.25 Crores calculated at the rate of 18% per annum from the date of payment by the Plaintiff till repayment by Defendants to the Plaintiff. The agreement to pay interest as aforesaid is recorded by the Defendants in their letter dated 06.02.2009 given by the Defendants and received by the Managing Director of the Plaintiff on 12.02.2009. Hereto annexed and marked as Exhibit “B” is a copy of the said cheque bearing No.937227 issued by the Defendants in favour of the Plaintiff. Hereto annexed and marked as Exhibit “C” is a copy the said letter dated 06.02.2009 signed by both the Defendants. The Defendants have thus contracted to pay interest @ 18% per annum on the said sum of Rs.25,00,00,000/- (Rupees Twenty Five Crores Only). 9. The Plaintiff states that the Defendants by their undated letter (received by the Plaintiff on 30.01.2009 and signed by both the Defendants) admitted (i) the fact of negotiations between themselves and the Plaintiff for the development of property owned by them at villages Kudave, Nandgaon, Turamale and Chirvat at Taluka Panvel, (ii) the receipt of Rs.25 Crores from the Plaintiff by the said cheque No.820140 dated 25.02.2008 of ICICI Bank, (iii) non materialization of the negotiation in respect of the said land, (iv) issuance of the said cheque for refunding the amount paid by the Plaintiff. The Plaintiff states that vide their aforesaid joint letter, the Defendants specifically requested the Plaintiff to deposit the said cheque bearing No.937227 dated 07.01.2009, for the sum of Rs. 25,00,00,000/- (Rupees Twenty Five Crores Only) on 05.02.2009.” 8 Thereafter, the Plaintiffs allege in paragraph No.10 that the cheque was deposited on 05.02.2009 but the Bankers of the Defendants i.e. Indian Overseas Bank by memorandum dated 06.02.2009 returned the cheque unpaid with remark “insufficient funds”. The Plaintiffs informed the Defendants regarding this dishonour through their Advocate’s notice dated 18.02.2009. The reply was received and certain false and frivolous *5* sj.201.10 reasons were given to justify dishonour of the cheque. It is alleged that the Defendants did not dispute the issuance of cheque from a joint bank account maintained by them and despite having been given 15 days time to clear it, the cheque was not honoured by them. It is in such circumstances, the instant summary suit has been filed. The writ of summons was served on the Defendants soon thereafter. 9 On appearance being entered by the Defendants’ Advocate, the present Summons for Judgment has been taken out and duly served on the Defendants’ Advocate. 10 There is an affidavit in reply filed to the Summons for Judgment in which in paragraph No.2 it is stated that for the reasons set out therein, the Summons for Judgment be dismissed. It is, then, urged that the stand of the Defendants has been made clear in the reply. Thereafter, it is contended that considering the magnitude of the project the investment had to be enormous, there will be requirement of continuous funds, there were several interested investors, the Plaintiff is one of them. It is stated that the Plaintiffs were satisfied with the papers and documents and that is how they agreed to enter into a joint venture. It is stated that substantial negotiations took place but MoU could not be entered. The plea of recession in market is also raised. It is then contended that in or around January, 2009 the Plaintiffs through their Director approached the Defendants stating that the Plaintiffs are intending to submit a tender for purchase of the land of Finlay Mills, Mumbai. The Plaintiffs had applied to their Bank for finance and the Bank had assured to give certain facilities but the Plaintiffs had to show to the Bank that their financial status is adequate and they had money receivable. Hence, in good faith the cheque No.937227 dated 07.01.2009 drawn on the Indian Overseas Bank was handed over to the Plaintiffs. *6* sj.201.10 This cheque was in the sum of Rs.25 Crores. It is stated that the cheque was never given with intention to allow the Plaintiffs to deposit it but it was given to show to the Plaintiffs’ bankers the proof of their financial stability. Therefore, it is contended that once cheque was handed over, the Plaintiffs tried to dictate their terms. When the Defendants rejected these terms, the Plaintiffs sought refund of the amount. It was stated that the money could not be refunded, hence, a meeting was arranged on 31.01.2009. The Plaintiffs did not adhere to the instructions given in this meeting for not depositing the cheque. Thereafter, there was another meeting at which Mr.Sheth of the Plaintiffs threatened criminal prosecution and called upon the Defendants to mutually cancel the agreement for joint venture. It is under this threat of criminal prosecution that the letter dated 06.02.2009 was addressed and the Defendants agreed to repay Rs.25 crores under force and coercion. It is, therefore, clear that this threat of the Plaintiffs was real because they initiated criminal proceedings by filing a complaint under Section 138 of the Negotiable Instruments Act before the Metropolitan Magistrate’s 13 Court, Dadar, Mumbai which proceedings are being contested. For all these reasons, it is stated that there are triable issues and this Court will not be able to record any conclusive finding in absence of opportunity to both sides to lead the evidence. This is a fit case where unconditional leave may be granted. 11 In the rejoinder affidavit, the Plaintiffs have dealt with this version and have stated that there is no substance in any of these allegations and they have been made as an afterthought. Once consideration has been shown for the cheque and that dishonour of the same is admitted, then, the version that there were some threats administered is false and bogus. My attention is invited to paragraph No. *7* sj.201.10 14 of the rejoinder wherein each of the statements in the affidavit in reply have been dealt with and it is stated that the story is nothing but total falsehood. For these reasons, it is stated that the Summons for Judgment be made absolute. 12 It is on this material, I have heard Mr.D’Vetre, learned Senior Counsel appearing for the Plaintiffs and Mr.Kapadia, learned Senior Counsel appearing for the Defendants. 13 Mr.D’Vetre submits that the requirements of Order-XXXVII Rule-1 are satisfied in this case. The Plaintiffs have relied upon a letter Exhibit-A to the plaint which is received on 30.01.2009 by the Plaintiffs. Mr.D’Vetre submits that this letter clearly sets out the purpose for which the cheque was handed over and the admission therein, that the negotiations in respect of the project did not materialize, therefore, the cheque of Rs.25 crores was handed over by the Defendants with request that the same should not be deposited prior to 05.02.2009 and thereafter, the parties shall sit together and mutually decide whether interest amount should be paid thereon or not, is absolute. In the submission of Mr.D’Vetre, this letter clearly states that the cheque was to be presented as agreed on 05.02.2009 and since the cheque was of 07th January, 2009, loss in the interim period was to be compensated by payment of interest and rate which was to be mutually agreed at a subsequent stage. According to Mr.D’Vetre, nothing except request for deferring the presentation of cheque must be read in this letter. 14 Mr.D’Vetre invites my attention to Exhibit-C of the paper book which records that the meeting was held on 31.01.2009 wherein it was mutually agreed that the Defendants would pay interest at the rate of 18% per annum on the sum of Rs.25 crores from the date of payment by the Plaintiffs till the repayment. Mr.D’Vetre states that this letter is signed by *8* sj.201.10 both sides as is evident from the signatures below same. Mr.D’Vetre submits that the cheque was presented on 05.02.2009 and dishonoured on 06.02.2009. In such circumstances and when the criminal proceedings were initiated on 04.04.2009, there is no question of any threat as alleged by the Defendants. These are legal proceedings which are initiated and the Plaintiffs were well within their rights to file a complaint under Section 138 of the Negotiable Instruments Act. Mr.D’Vetre submits that the Defendants’ reply to this letter and even the contents of the affidavit in reply would show that the story put forth by the Defendants is clearly an afterthought. Mr.D’Vetre submits that there is presumption under Section 118(a) of the Negotiable Instruments Act that the negotiable instrument has been given for a valid consideration. This presumption would be applicable in this case and does not even stand prima facie rebutted. Once the dealings are admitted, handing over of the cheque of Rs.25 crores is admitted, dishonour thereof is admitted, then in such circumstances the defence raised by the Defendants is totally moonshine, frivolous, vexatious and therefore, this Court should allow this Summons for Judgment. 15 On the other hand, Mr.Kapadia submits that it is inconceivable that such huge amount would be handed over without any writing and even without recording as to why the same was handed over. He submits that the letter at page-28 would show that the Defendants’ version is not an after-thought but there was a real threat. There is clear coercion because the footnote would make it clear. Mr.Kapadia further submits that it is in the first instance itself namely in the reply to the notice prior to the suit that the Defendants have set up their defence and therefore, this is not a case where at the stage of hearing of the Summons for Judgment, such defence or version has been set out. Inviting my *9* sj.201.10 attention to page No.36 of the plaint which is an extract of letter addressed by the Plaintiffs’ Advocate, Mr.Kapadia submits that the understanding therein is clearly spelt out. If such is the case, then, there was no occasion that the parties should have met and discussed nothing about interest. It was clear that the Plaintiffs were aware that the cheque was to be handed over to them so that they can show it to their own bankers and other interested parties who were part of the negotiations in relation with Finlay Mill’s properties. In such circumstances and when the plea raised that the Defendants were pressurized and forced to give in writing and the cheque, then, the presumption is rebutted at the stage itself. Mr.Kapadia invites my attention to the affidavit in reply and particularly where the Defendants have denied their liability to pay the sum, the entire version is set out and according to him, it raises several triable issues. For all these reasons, according to Mr.Kapadia, this Court must grant unconditional leave to the Defendants. 16 With the assistance of the learned Senior Counsel appearing for the parties, I have perused the plaint and annexures thereto, so also, the affidavit in reply and the rejoinder. 17 In this case it is not disputed that the suit is based on dishonour of a cheque. Section 6 of the Negotiable Instruments Act states that a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. Section 118 of the same enactment is falling under Chapter-XIII which sets out the special rules of evidence wherein a presumption as to negotiable instruments is raised. This section itself opens with the words “until the contrary is proved, the following presumptions shall be made” in respect of every negotiable instrument. Sub-clause (a) states that it was *10* sj.201.10 made or drawn for consideration and every such instrument when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred, for consideration. There are several other presumptions. 18 In the present case, the Plaintiffs have stated in the plaint that the suit is filed under Order-XXXVII of the Civil Procedure Code and no reliefs not falling under the ambit of Rule-2 thereof are claimed. The Order-XXXVII Rule-2 is clear. Therefore, the first contention that the suit is not maintainable as a summary suit must fail. 19 While dealing with Mr.Kapadia’s submission that the presumption under Section 118(a) of the Negotiable Instruments Act stands rebutted, it is worthwhile noting that in paragraph No.6 of the plaint, the details of the cheque issued by the Plaintiffs and drawn in favour of the Defendant No.1 have been set out and it is further stated that this cheque was cleared from the Bank’s account of the Plaintiffs on or around 08.03.2008 and credited to the Defendants’ account which is with Indian Overseas Bank, Wadala Branch, Mumbai bearing Account No. 7777. 20 Thereafter, it is stated that the deal and transaction proposed between the parties could not materialize and therefore, as agreed the Defendants handed over a cheque signed by the Defendant No.1 bearing No.937227 for Rs.25 crores which cheque was from the account maintained by the Defendants with Indian Overseas Bank, Wadala. It is undisputed that this cheque was signed by the Defendant No.1. It is stated that on 30.01.2009 the Defendant No.1 orally requested the Plaintiffs not to deposit this cheque till 05.02.2009 on the ground that up to 30.01.2009 the Defendants would pay interest on the said amount. This was on account of lack of requisite balance in the account of the *11* sj.201.10 Defendants. Therefore, the Plaintiffs did not deposit the cheque immediately, but, were to deposit it on 30.01.2009. However, on 30.01.2009 the Plaintiffs received a letter from the Defendants requesting it to deposit the cheque on 05.02.2009 and immediately, thereafter, they would sit together and decide on liability of interest. It is with this specific purpose that I have reproduced above paragraph Nos.8 and 9 of the plaint. 21 While dealing with these paragraphs, what the Defendants have stated in their affidavit in reply is that in or about January, 2009, one Mr.Sheth of the Plaintiffs approached them and stated that the Plaintiffs intended to purchase a tender of Finlay Mill’s land and they applied for finance to the Plaintiffs’ banker and the bank agreed to give certain facility, but the Plaintiffs were to show that their financial status was adequate and they had money receivable. Hence, in good faith the Defendants gave the said cheque bearing No.937227 dated 07.01.2009 and it was only given with intention to enable the Plaintiffs to show it to their bankers and it was never intended that it would be deposited or encashed. However, at the same time in paragraph Nos.5(o) of the affidavit in reply, it is stated by the Defendants that the Defendant No.1 issued a cheque with an undated letter authorizing deposit. Thereafter, it is stated that this was a drama of the Plaintiffs and they misrepresented and misled the Defendant No.1 in issuing the cheque of the amount which was already expended and applied in the project. Therefore, neither the letter nor the cheque is valid, binding and enforceable. In paragraph No. 5(p) it is stated that the cheque being handed over, thereafter, the Plaintiffs tried to dictate their own terms which were rejected by the Defendant No.1. Therefore, the Plaintiffs got agitated and threatened to back out from the agreement and sought refund of Rs.25 crores. The *12* sj.201.10 Defendant No.1 tried to explain the circumstances but the Plaintiffs did not agree, therefore, the meeting was held on 31.01.2009 where the said fact was informed and the request was made not to deposit the cheque or encash it. These instructions were not adhered to by the Plaintiffs and on 06.02.2009, Mr.Sheth of the Plaintiffs met the Defendant No.1 and informed him that the cheque was deposited and that his how the Defendant No.1 came to know that the cheque was presented but dishonoured. It is then stated that Mr.Sheth threatened criminal prosecution and called upon the Defendants to mutually cancel the agreement and further agreed to refund the money invested with interest. Under such threat of criminal prosecution, further letter dated 06.02.2009 was issued. 22 However, while dealing with paragraph Nos.8 and 9 of the plaint, what the Defendants stated in their reply that they reiterate their version as set out in paragraph No.5. From these undisputed facts that the cheque was issued duly signed by the Defendant No.1, it was presented and dishonoured with the memo of Bank; all that would emerge is that the Defendants tried to set out their version with regard to letter dated 06.02.2009. 23 To my mind by mere assertion of present nature it cannot be said that the presumption under Section 118(a) of the Negotiable Instruments Act stands rebutted straightway. If the Plaintiffs’ version of cheque being issued by them and duly deposited and credited in the account of the Defendants is undisputed and further undisputed fact is that the Defendants issued a cheque in the same amount in favour of the Plaintiffs, which on presentation came to be dishonoured, then, mere version of the Defendants either in their reply to the notice prior to the suit or in their affidavit in reply, does not rebut the presumption under *13* sj.201.10 Section 118(a) of the Negotiable Instruments Act. Thus, not only the above facts are undisputed but equally not in dispute is the fact that the letters at page Nos.26 and 28 are signed and issued by the Defendants. The contents of the letter at page Nos.26 and 29 of the plaint paper book, are clear and they cannot be brushed-aside at this stage as contended by Mr.Kapadia. For me to read into it something more at this stage will not be proper. It is the Defendants’ version and if they desire to make good the same, then, they would be entitled to leave to defend but that would be on conditions. The understanding as asserted in the replies is oral and not reduced in writing. Accepting it would be going contrary to and ignoring the contents of the letters of the Defendants. If this understanding is not admitted by the Plaintiffs, then, all the more the presumption is applicable. The object and purpose of Order-XXXVII of the Civil Procedure Code has been summarized by the Hon’ble Supreme Court in AIR 2008 SC 1117 (Neebha Kapoor Vs. Jayantilal Khandwala and others) as under:- “7-8. A summary suit, as provided for in Order 37, Rule 1 of the Code is maintainable if it is filed on bills of exchange, hundis and promissory notes. A cheque is a