1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINRY ORIGINAL CIVIL JURISDICTION SUMMONS FOR JUDGMENT NO. 58 OF 2009 IN SUMMARY SUIT NO. 104 OF 2009 Divya Kohli d/o. Devkumar Kohli ... Plaintiff. Vs. Gopal R. Naik ... Defendant. Mr. Chetan Kapadia with Mr. Jagdish Choudhary and Mr. Khokhawala i/b. M/s. Nankani & Associates for the Plaintiff. Mr. Mehul Shah i/b. Arvind Shah for the Defendant. CORAM : A.A. SAYED, J DATE : JULY 2, 2009 P.C.: 1. The above Summons for Judgment has been taken out by the plaintiff to enter a judgment in her favour against the defendant for a sum of Rs. 86,81,225/-, with further interest @ 18% per annum on the principal sum of Rs. 56,50,000/-, from the date of institution of the suit till payment or realization. 2. The case of the plaintiff is that the defendant was working as an Auditor/Chartered Accountant with the plaintiff. During April, 2004 to November, 2004, by virtue of a family settlement and share in the 2 property of her grand-mother, the plaintiff and her mother received some amount of money in cash. She accordingly requested the defendant for advice to account and plan the investment of the said amount. It is the case of the plaintiff that the defendant adviced the plaintiff that the money can be invested in stock market and tax saving schemes so as to minimize payment of taxes and for that purpose he would require some time to finalize the mode of investment and to ascertain the final figure of the income tax. The plaintiff accordingly handed over to the defendant a sum of Rs. 52 lacs in cash on 17-11-2004 and Rs. 10 lacs in cash on 29.11.2004 with the consent and in presence of her mother. It is further the case of the plaintiff that in order to get further confidence of the entrusted monies the defendant issued ten 'undated' cheques valued at Rs. 61,50,000/-. According to the plaintiff, the defendant, till December, 2004 did not give any details of any tax saving plans and schemes and in the month of January, 2005, she asked for details of the investments made by the defendant of the monies entrusted to him and that sometime in February, 2005, for the first time, the defendant informed the plaintiff that he had used the entire amount of Rs. 62 lacs for his personal use and assured the plaintiff that he will return the entire amount to the plaintiff in a short period. 3 Accordingly, sometime in March, 2005, the defendant in his own 3 handwriting, vide a fax gave a schedule of payment for an aggregate amount of Rs. 58 lacs, to be paid in six instalments by 28.03.2005. Thereafter, since no amount was paid, another writing dated 23.03.2005 was given by the defendant, showing schedule of repayment of aggregate sum of Rs. 62 lacs in four instalments. Inspite of repeated promises, the defendant did not make payment and in the 2nd week of April, 2005, the defendant put different dates of the month of April, 2005 on the 10 undated cheques and assured the plaintiff that the cheques will be honoured on deposit. However, on deposit of the first cheque for Rs. 5 lacs, the same was dishonoured and was returned with the remark "insufficient funds". On being informed of this by the plaintiff, the defendant promised her that he would give a proper Schedule of repayment in 1-2 days and requested not to initiate any action against him. The defendant, thereafter on 15.04.2005 gave a further Schedule written in his own handwriting assuring that Rs. 10 lacs will be paid by 19.04.2005 and thereafter every week commencing from 19.04.2005, and that between 30th April to May 1st week, the entire amount would be cleared. However the defendant failed to pay any amount. 4 Thereafter, on 30.05.2005, the defendant, on his own letter head and in his own handwriting and signature, gave the plaintiff one more writing 4 for repayment of Rs. 52 lacs with an assurance that he will pay Rs. 15 lacs on 31.05.2005 and balance 37 lacs plus interest before 15.06.2005. On 16.06.2005, as nothing was paid, the defendant further endorsed his earlier writing of 30.05.2005 and assured the plaintiff that before 5.07.2005 Rs. 42 lacs will be paid in reasonable instalments with interest and Rs. 10 lacs would be paid by 20.05.2005. However, the defendant did not keep his promise. It is further stated that in the first week of October, 2005, plaintiff again approached the defendant and defendant once again promised to pay entire money within few days and in the meantime gave fresh cheque of Rs. 50,000/- to show his bonafides. The said cheque was cleared on presentation. 5 On 7.10.2005, the defendant changed the dates on the aforesaid 10 cheques and put the date as '7.10.2005' and put his signatures on the said cheques which were given in the month of April, 2005. As per the assurances given by the defendant, the plaintiff deposited one cheque dated 7.10.2005 for Rs. 5 lac in her Bank, but the same was dishonoured and returned. Plaintiff thereafter approached the defendant, and informed him that she would be constrained to take legal action. However the defendant again requested for some time and promised to pay the entire amount in a short period. Thereafter sometime in the first week of April, 2006, 5 defendant informed the plaintiff that she can present the cheques for encashment, and accordingly, the plaintiff presented 9 cheques for payment in the first week of April, 2006, aggregating to an amount of Rs. 56,50,000/- for encashment. The defendant promised to pay balance amount of Rs. 5,50,000/- in a short period. However all the cheques were dishonoured. The plaintiff thereafter issued demand notice to the defendant through her Advocate under the Negotiable Instruments Act. Reply dated 19-05-2006 came to be filed by the Advocate for the defendant, wherein the receipt of the amounts was not denied by the defendant. The plaintiff thereafter, filed Complaints in respect of the nine cheques under the Negotiable Instruments Act before the Judicial Magistrate, First Class and the said proceedings are pending. 6 Thus, according to the plaintiff, the defendant has cheated her and an amount of Rs. 61,50,000/- (after giving credit for Rs. 50,000/- for the cheque which was encashed) was illegally diverted by the defendant for his personal use. According to plaintiff, the defendant has admitted his liability. Since one cheque out of 10 cheques was not enforceable under the Negotiable Instrument Act, the Complaints were filed in respect of 9 cheques covering a sum of Rs. 56,50,000/-. Accordingly, the above suit and Summons for Judgment came to be filed by the plaintiff for the 6 principal sum of Rs. 56,50,000/- alongwith interest @ 18% per annum thereon from the date of filing of the suit till payment and/or realization. According to plaintiff as per Section 80 of Negotiable Instruments Act, 1981, the defendant is liable to pay 18% interest per annum. 7 The Summons for Judgment has been opposed by the defendant by filing reply. It is the case of the defendant in the reply that he was working as an Auditor of the plaintiff individually from 1989 till March, 2005 and, thereafter, he left plaintiff's service. The plaintiff requested him sometime in October, 2004 that she wanted to convert a huge cash amount into official amount and requested him to help her and that in good faith and out of sympathy he agreed to do the same, however, the plaintiff has taken undue advantage of this fact. According to the defendant, plaintiff withdrew an amount of Rs. 52 lacs from her benami Bank Account in Karnataka Bank Ltd., Four Bunglaws, Andheri on 17.11.2004 and her employee Mr. Niel Lobo and Mr. Jagdish Joshi handedover the said amount to him in the bank premises itself. Thereafter, on 29.11.2004 the defendant visited the plaintiff's office and Mr. Niel Lobo handed over further sum of Rs. 10 lacs in cash to him. According to the defendant, plaintiff wanted official entries for the financial year 1.04.2005 to 7 31.03.2006 and, therefore, he issued 10 cheques amounting to Rs. 61,50,000/-, and Rs. 50,000/- was agreed to be paid by him subsequently. According to the defendant, plaintiff has completely mis-interpreted the writings at Exh. B and Exh. C to the plaint to suit her motive. According to the defendant, the said 10 cheques were to be presented by the plaintiff on mutual understanding and by consent and it was agreed that the plaintiff would inform him on what date she would be presenting the cheque, prior to which the defendant was to deposit the amount of the respective cheques in his account. 8 According to the defendant, the plaintiff deposited first cheque for Rs. 5 lacs on 11.04.2005 without his knowledge and consent and in breach of understanding between them. According to the defendant, he is a person from middle class family and did not have so much funds in his account. On being confronted by the defendant, the plaintiff apologized and said that a fresh Schedule can be worked out and it was under those circumstances, that the defendant gave writing at Exhibit C to the plaint. Sometime in the end of April, 2005, the plaintiff contacted him and informed him that she had changed her mind and she wanted the amount of Rs. 62 lacs in cash and the defendant agreed to the same. On 30.05.2005, the defendant went to the plaintiff's office and handed over Rs. 10 lacs in cash to the plaintiff 8 personally. Thereafter on 31.05.2005 the plaintiff came to his residence with her family friend Mr. Brij Oberoi, when he paid further sum of Rs. 15 lacs in cash to the plaintiff in presence of Mr. Brij Oberoi. Thereafter on 20.06.2005 Mr.Brij Oberoi and Mr. Niel Lobo visited his office and a further sum of Rs. 10 lacs in cash was paid to them. Thus in all, according to the defendant, he had repaid a sum of Rs. 35 lacs in cash to the plaintiff. However, according to the defendant, though he called upon the plaintiff to issue receipt for payments for his record and return the cheques, the plaintiff expressed her inability to do so, as that would create a record. So far as the cheques were concerned, the plaintiff promised the defendant not to deposit the same and the said cheques would be returned to him soon. According to the defendant, the letter at Exhibit D to the plaint mentions the amounts that have been repaid to the plaintiff and the plaintiff has interpreted the same falsely and incorrectly. 9 According to the defendant, the plaintiff thereafter approached him in the month of September, 2005 and informed him that she would like to collect the balance amount of Rs. 27 lacs by cheque and also the amount of Rs. 35 lacs which the defendant had paid her in cash, by cheques and the plaintiff suggested that she will repay the amount and Rs. 35 lacs back to the defendant in cash, which defendant could deposit in his account, as agreed earlier and that after informing him she would present the cheques. 9 The defendant, told the plaintiff that she must not go on changing her mind and that he had agreed to help her initially but as he wanted to sort out the issue and get out of it as soon as possible as things were getting complicated. The plaintiff, however, requested him that this was as a last favour and by the year end everything would be sorted out. Accordingly, the defendant repaid the sum of Rs. 50,000/- by cheque to the plaintiff, as the 10 cheques which he had issued were for the amount of Rs. 61,50,000/-. According to the defendant, the plaintiff then visited his office sometime in September 2005 and he changed the dates of all the 10 cheques to 7.10.2005 and put his initials thereon and handed over back the cheques to the plaintiff in presence of Mr. Brij Oberoi. The defendant has further stated that the plaintiff was to first pay back Rs. 35 lac in cash to him and then present the cheques. However, in complete breach of the said understanding and without paying him anything, on 6.10.2005, the plaintiff informed him that she is going to present the cheques to bank and, accordingly, on 7.10.2005, he addressed a letter to the bank and informed the bank to stop payment of the cheques. However, the plaintiff went ahead and deposited the cheques. 10 According to the defendant he did not trust the plaintiff anymore and he informed her that he had stopped payment of the cheques since the 10 plaintiff was not returning the cheques and he did not want any amount back and that he was ready and willing to pay the balance of Rs. 26,50,000/- in cash. He also requested her not to present the cheques and relieve him. According to the defendant, he paid a further sum of Rs. 11,50,000/- in cash over the period of time from end of October, 2005 till 30.03.2006 to Mr. Niel Lobo and Brij Oberoi who collected the amount on behalf of the plaintiff from his office, and, therefore during this period the plaintiff did not present any cheque for encashment. According to the defendant the balance amount payable by him to the plaintiff was Rs. 15 lacs and he called upon the plaintiff several times to collect the said amount but the plaintiff has not collected the same. The defendant has denied that plaintiff is entitled to any interest and has contended that the suit is not maintainable under Order 37 Rule 2 of Civil Procedure Code and has prayed that the Summons for Judgment be dismissed. A Rejoinder has also been filed by the plaintiff reiterating her case and denying the contentions of the defendant in his reply. 11. The learned Counsel for the plaintiff submitted that the defendant was acing as the Chartered Accountant/Auditor of the plaintiff and had misused his position. He pointed out that the defendant has admitted the receipt of the amount of Rs. 62 lacs in cash from the plaintiff and that he had issued 10 11 cheques aggregating to Rs. 61.5 lacs to the plaintiff and the balance of 50,000/- was paid by defendant by cheque dated 04-10-2005. The learned Counsel also pointed out the writings of the defendant at Ex. ‘A’ to ‘D’ of the Plaint and submitted that the said writings in the handwriting of the defendant, were Schedule of repayment as promised by the defendant to the plaintiff and further pointed out that the said writing at Ex. ‘D’ also discloses the agreement to pay interest. He further submitted that the fact that the dates mentioned on the cheques were changed and initialed by the defendant, is also admitted. The learned Counsel further argued that if the at all any amounts in cash were repaid by the defendant to the plaintiff in May/June 2005 as contended by the defendant in his reply, the defendant would not have sometime in September/October 2005, changed the dates and signed 'all' the 10 cheques by putting the date as 07-10-2005. He further submitted that if at all any such cash amounts had been paid by the defendant to the plaintiff in May/June 2005, it would have been mentioned in the defendant’s Advocate’s reply dated 19-05-2006. The learned Counsel contended that since the suit is based on cheques which were dishonoured, summary suit is maintainable and the plaintiff is entitled to interest @ 18% per annum under the provisions of section 80 of the Negotiable Instruments Act, 1881. The learned Counsel submitted that the defendant has no valid defence and the Summons for Judgment be allowed and the suit be decreed. 12 12. The learned Counsel for the defendant on the other hand submitted that the amounts which were handed over to the defendant by the plaintiff were cash amounts and were not accounted for by the plaintiff for the purposes of paying income tax. He submitted that the defendant was the Chartered Accounted/Auditor of the plaintiff and had acted in good faith and was merely trying to help the plaintiff who had taken undue advantage of him. He submitted that it is admitted by the plaintiff in the plaint that the amounts were entrusted by the plaintiff to the defendant as her Chartered Accountant/Auditor and therefore no liability can be imposed on the defendant. The learned Counsel submitted that though according to the plaintiff the cash amounts also belonged to the mother of the plaintiff, the mother is not joined as the co-plaintiff in this suit. The learned Counsel submitted that a sum of Rs. 35 lacs has already been repaid to the plaintiff sometime in May/June 2005 and if the defendant had any intention to cheat the plaintiff, he would not have admitted even the amount of Rs. 15 lacs as due and payable to the plaintiff, which admission is reflected in the reply of the defendant. The learned Counsel for the defendant pointed out Ex. “D” to the plaint and submitted that the said writing reflects that a sum of Rs. 10 lacs was already repaid by the defendant to the plaintiff in cash and therefore there were discrepancies in the demand made by the plaintiff. 13 13. The learned Counsel for the defendant placed reliance upon the judgment of the Full Bench of Allahabad High Court in the case of Dip Narain Singh vs. Nageshar Prasad, 1929 ILR, Vol LII 338 and the judgment of the Full Bench of Madhya Pradesh High Court in the case of Gulabchand Gambhirmal vs. Kudilal Govindram, AIR 1959 MP 151, to submit that where the consideration or object of an agreement is unlawful the agreement would be void as provided in Section 23 of the Indian Contract Act, 1872. He therefore contended that the agreement between the plaintiff and the defendant in connection with converting the cash amounts into official amounts being unlawful, no claim or liability arises out of the said agreement which is void in the eyes of law. He therefore submitted that the defendant has made out triable issues and urged that the Summons for Judgment be dismissed. 14. Countering the legal submission of the learned Counsel for the defendant, the learned Counsel for the plaintiff submitted that section 23 of the Contract Act is not applicable in the facts of this case. He also invited my attention to section 65 of the Indian Contract Act, 1872, and submitted that the defendant who had received advantage under the agreement, is bound to restore the advantage or benefits he had received under the 14 agreement, even if the agreement is held as void. 15. I have heard the learned Counsel for the parties and perused the material on record. At the outset it is to be noted that the plaintiff has based her claim on 9 cheques aggregating to Rs. 56,50,000/-. According to the plaintiff one cheque out of the 10 cheques could not be enforced under the Negotiable Instruments Act, 1881. The said cheques were admittedly written by the defendant in favour of the plaintiff. It is admitted by the defendant in his reply that he had received a sum of Rs. 62 lacs in cash from the plaintiff and that he had issued 10 cheques aggregating to Rs. 61.5 lacs in favour of the plaintiff and the balance amount of Rs 50,000/- was repaid by a cheque dated 04-10-2005. The writings at Ex “A” to Ex “D” are also admitted by the defendant. If at all, as contended by the defendant, that certain amounts in cash aggregating to Rs. 35 lacs were repaid by him to the plaintiff sometime in May/June 2005, there would have been no occasion for the defendant to revalidate 'all' the 10 cheques by changing the date and initialing the same, sometime in September or October 2005. This fact of revalidation of cheques in September 2005 is admitted by the defendant in para 11 of in his Affidavit in reply (though according to the plaintiff this was done in October 2005). Moreover, nothing about any repayment of cash amounts by the defendant in May/June 2005 to the plaintiff has been stated 15 in the defendant’s Advocate’s reply dated 19-05-2006, which reply was in response to the plaintiff’s Advocate’s notice under section 138 of the Negotiable Instruments Act, 1881. Since the cheques are issued by the defendant in favour of the plaintiff, there was no question of joining the mother of the plaintiff as co-plaintiff in the present suit. It is also noted that in the reply of the defendant, he has admitted the claim of the plaintiff to the extent of Rs. 15 lacs. 16. Insofar as the legal submission of the learned Counsel for the defendant in connection with section 23 of the Indian Contract Act, 1872, is concerned, even assuming section 23 is applicable and the agreement between the plaintiff and the defendant becomes void for any reason, in light of the clear admission of the defendant of having received the amount of moneys from the plaintiff and the defendant admittedly having issued cheques in favour of the plaintiff and thus having received advantage, section 65 of the Indian Contract Act, 1872 Act would clearly come in aid of the plaintiff. The said section 65 of the Indian Contract Act, 1872, is quoted hereinbelow: “65. Obligation of person who has received advantage under void agreement – When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or make compensation for it, to the person from whom he received it.” 16 As regards the rulings cited by the learned Counsel for the defendant, it is to be noted that the said rulings pertain to the section 23 of the Indian Contract Act, 1872 and do not deal with section 65 of the said Act and therefore the defendant cannot draw support from the rulings relied upon by him. 17. In the facts and circumstances of the case, in my view the defendant has not raised any substantial defence to the suit. However at the same time, having regard to the nature of relation between the parties and the peculiar nature of facts of the case, I am not inclined to completely shut out the defendant from defending the suit. 18. Taking an overall view of the matter, in my opinion, the following order would meet the ends of justice; (i) The defendant is granted leave to defend the suit conditional upon his depositing in this Court a sum of Rs. 28,25,000/- being 50% of the principal amount claimed by the plaintiff within a period of 12 weeks from today; (ii) In the event the defendant deposits the aforesaid amount, the suit to stand transferred to the list of suits of commercial causes; (iii) The plaintiff is permitted to withdraw an amount of Rs. 15,00,000/- from the aforesaid amount unconditionally. The balance amount of Rs. 13,25,000/- is also permitted to be withdrawn by the plaintiff on her furnishing appropriate security to the satisfaction of the Ld. Prothonotary and Senior Master; 17 (iv) The defendant to file Written Statement within 30 days from the date of the aforesaid deposit being made. Affidavit of Documents within 8 weeks thereafter. Discovery and Inspection within 8 weeks therefrom; (v) In the event the defendant fails to deposit the aforesaid amount, liberty to the plaintiff to apply for further orders. 19. The Summons for Judgment to stand disposed of accordingly. (A.A. SAYED J)