SJ435-09 1 YBG IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION SUMMONS FOR JUDGEMENT NO.435 OF 2009 IN SUMMARY SUIT NO.1978 OF 2009 Shyam H. Gaba .. Plaintiff Versus Shanti Investments and Ors. .. Defendants Mr.Rakesh Kumar i/b. Vijendra Jabra for plaintiff Mr.Jain i/b. Ramesh Jain and Kusum Jain for defendants. CORAM: S.C. DHARMADHIKARI, J. DATE : 23rd AUGUST, 2010. P.C. 1] This is a suit by the plaintiff under Order XXXVII of Code of Civil Procedure, 1908 based on bills of exchange, copies of which are annexed to the plaint as Annexures A-1 to A-4. 2. The bills of exchange have been drawn on 1st July, 5th July and 8th July 2006. It is the case of the plaintiff that the parties are known to each other. Defendant Nos.2 and 3 are partners of defendant No.1 and they approached the plaintiff for financial assistance. Accordingly, a loan of Rs.4 lakhs was given and that is how the suit bills of exchange have been executed. 3] Upon the period prescribed therein coming to an end, a demand was made in writing for payment. The demand was made pursuant to the acceptance of bills of exchange, details whereof are set out in paras 3 and 4 SJ435-09 1 of the plaint. 4] It is stated that none of the defendants responded to the demand notice. In these circumstances, the summary suit has been filed and the amount under the bills of exchange has been claimed with interest at the rate stipulated in Negotiable Instruments Act, 1881 (Act for short). The defendants have come up with a defence of complete denials. Their defence is initially that there are no bills of exchange executed and there are several blanks in the annexures to the plaint. Secondly, it is contended that assuming without admitting that the annexures could be termed as bills of exchange within the meaning of section 5 of the Act, yet, none of the bills of exchange have been accepted and there is no person named therein as acceptor. In such circumstances, the suit bills of exchange do not meet the requirements in law. 5] In the additional affidavit which has been filed in the month of June 2010, the defence taken is that there were some transactions between the parties and on the borrowings certain sum was paid as interest from time to time. However, under that dealing a sum of Rs.50,000/- is still due and payable. Therefore, if at all there were any dealings or transactions between the parties, they have all been concluded and only balance sum of Rs. 50,000/- is due and payable. Therefore and when the financial position of the defendants was not sound, they could not have borrowed further sum by executing any documents, much less the suit bills of exchange. For all these reasons, unconditional leave to defend be granted. 6] I have heard Mr.Rakesh Kumar for plaintiff and Mr.Jain for defendants. With their assistance, I have perused the plaint and the annexures, including the bills of exchange and the affidavits filed in reply SJ435-09 1 and rejoinder. 7] To my mind, the position in law is clear. Section 5 of the Act defines a bill of exchange. In Chapter III, which is entitled “Parties to Notes, Bills and Cheques”, section 26 speaks of capacity to make promisory notes etc. Every person capable of contracting, according to law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsement, delivery and negotiation of a promissory note, bill of exchange or cheque. Therefore, he will be bound by the drawing, delivery and execution of the promisory note, bill of exchange or cheque. Section 27 and section 28 speak of agency and liability of the agents signing whereas section 29 provides for liability of the legal representatives of the person signing the promisory note etc. and states that he is personally liable unless he limits his liability in the manner provided in this provision. Section 30 provides for liability of the drawer to compensate the holder in case of dishonour by the drawer - acceptor. Section 31 provides for liability of drawee of cheque whereas section 32 deals with liability of maker of promisory note and acceptor of bill. These are provisions which are subject to contract to the contrary. Presently, I am not concerned with sections 33, 34 and 35 so also section 36 of the Act. Section 37 of the Act reads thus:- “37. Maker, drawer and acceptor principals – The maker of a promissory note or cheque, the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker, drawer or acceptor, as the case may be.” SJ435-09 1 8] A bare perusal of section 37 would make it clear that the maker of a promisory note or cheque or drawer of bill of exchange, until acceptance and acceptor are, in the absence of a contract to the contrary liable in their capacity as sureties for makers, drawers or acceptors as the case may be. 9] Mr.Jain could not point out to me anything other than this, which would indicate that in the absence of acceptor's name in the bill of exchange so also his signature, the liability of defendants to pay the amount under the same does not arise in law. Therefore, the defence that assuming the bills of exchange are executed, they are not valid in law in the absence of any acceptor or his signature is clearly untenable. 10] If at all any reference is needed to any decision, the decision of His Lordship Vivian Bose, J. (as His Lordship then was), M/s.Dalsukh Nathmal Firm Kamptee Vs. Motilal Balchand Parwar and Ors., reported in A.I.R. 1938 Nagpur 262 is sufficient. 11] His Lordship has very clearly held that when there is no acceptance, the liability would be of the drawer as principle debtor. In these circumstances, the first contention of Mr.Jain based on the affidavit in reply and the plea taken in para 9 thereof deserves to be rejected. 12] Equally unsound is the other contention because if there were transactions in the past and some amount was paid towards interest allegtedly thereunder by itself does not mean that the suit transaction is not valid. Apart from the bald asserting nothing has been stated with regard to the alleged financial position of the defendants. Therefore, defence that there cannot be any possibility of further borrowings is nothing but an SJ435-09 1 attempt to avoid making payment under the suit bills of exchange. There may be liability in the past but prima facie from the documents annexed to the additional affidavit, it is clear that the same is of 2002-2004. There is no connection established as far as suit transactions and the transactions referred in the additional affidavit. 13] It is in such circumstances, that I find that the defence raised by the defendants cannot not be said to be bonafide. The same could have been raised immediately upon receipt of the demand notice, receipt of which is not denied. Further, the defence raised are contradictory and purely as an after thought. In such circumstances, the following order would serve the ends of justice:- 14] The summons for judgement is made absolute and the defendants are granted conditional leave to defend on deposit of a sum of Rs.4 lakhs within a period of twelve weeks from today. If the amount is deposited, the same shall be invested in fixed deposit of any nationalised bank subject to further orders. If the amount is deposited the suit shall stand transferred to the list of commercial causes with usual directions with regard to filing of the written statement, discovery and inspection. If the amount is not deposited, further consequences in law would follow. (S.C. DHARMADHIKARI, J.)