IN THE HIGH COURT OF JUDICATURE AT BOMBAY APPELLATE SIDE WRIT PETITION NO.1945 OF 2008 Dinesh Bhanjibhai Mawani ... Petitioner. Vs. M/s. Shivshakti Developers and ors. ... Respondents. Mr. M.M.Sathaye, Advocate for the petitioner. Mr. R.D.Soni i/b. M/s Ram and Co., Advocate for the respondents. CORAM CORAM CORAM : A.A.Sayed, J. : A.A.Sayed, J. : A.A.Sayed, J. DATE DATE DATE :17.12.2008. :17.12.2008. :17.12.2008. P.C. 1. This petition is directed against the order, dated 14.1.2008 passed by the Civil Judge, Senior Division, Nashik, whereby the Application of the respondents, seeking unconditional leave to defend the suit came to be allowed. 2. The petitioner is the original plaintiff [ 2 ] in the Trial Court in the suit which came to be filed against the respondents for recovery of Rs.14.71 lacs with interest thereon @ 18% p.a. It is the petitioner’s case that he was a partner of the respondent No.1- Firm under partnership deed dated 1.7.2003 alongwith respondent Nos. 2 to 4. By deed of retirement dated 1.11.2005, the petitioner retired from the partnership firm and the respondent No.5 was inducted in the firm as incoming partner. It is the further case of the petitioner that the firm is engaged in the business of development and construction and the accounts were settled. The respondents agreed to pay a sum of Rs. 16.71 lacs towards the share of the petitioner in view of his retirement, and a separate writing dated 2.11.2005 was executed in favour of the petitioner by the respondents acknowledging their liability to pay the said amounts and five cheques were issued to the petitioner by the respondents. Out of the five cheques, one cheque for Rs. 2 lacs was encashed by the petitioner. In view of some internal arrangement between the parties, the balance four cheques out of five cheques were returned to the petitioner and two cheques were issued to him by [ 3 ] the respondent No.1-Firm - one cheque dated 31.12.2005 in a sum of Rs. 5 lacs and second cheque, dated 30.4.2006 in a sum of Rs. 9.71 lacs were issued. The said two cheques were issued to the petitioner under the writing dated 2.11.2005. Since the two cheques, which are the subject matter of dispute were dishonoured, the suit came to be filed for recovery of the said sum of Rs. 14.71 lacs. 3. The learned Counsel for the petitioner submitted that the Trial Court has committed grave error in granting full unconditional leave to defend the suit. He submitted that the execution of the writing dated 2.11.2005 is not denied. Moreover the execution of the said cheques are also not denied. He submitted that the writing dated 2.11.2005 did not contain any arbitration clause and the arbitration clause in the partnership deed has no bearing in the facts of the case. The learned Counsel for the petitioner further submitted that since the liability is admitted by the respondents, if at all the Trial Court was inclined to grant leave to defend, the Court ought to have imposed a condition to deposit [ 4 ] the entire amount of suit claim i.e.Rs. 14.71 lac with 18% interest thereon in Court. 4. The learned Counsel for the petitioner has placed reliance on the decisions in case of (1) (1) (1) H.M.MANDALSA H.M.MANDALSA H.M.MANDALSA VS. VS. VS. M.RAMNARAIN reported in AIR 1965 M.RAMNARAIN reported in AIR 1965 M.RAMNARAIN reported in AIR 1965 SC SC SC 31 (2) JAGDISH CHADERK GUPTA VS. KAJARIA 31 (2) JAGDISH CHADERK GUPTA VS. KAJARIA 31 (2) JAGDISH CHADERK GUPTA VS. KAJARIA TRADERS TRADERS TRADERS (INDIA) LTD, reported in AIR 1964 SC 1882 (INDIA) LTD, reported in AIR 1964 SC 1882 (INDIA) LTD, reported in AIR 1964 SC 1882 (3) (3) (3) CHANDULAL NATHIBHAI SHAH VS. CHAMPAKLAL CHANDULAL NATHIBHAI SHAH VS. CHAMPAKLAL CHANDULAL NATHIBHAI SHAH VS. CHAMPAKLAL AMBALAL AMBALAL AMBALAL reported in 1993(2) MH.L.J. 1267 (4) reported in 1993(2) MH.L.J. 1267 (4) reported in 1993(2) MH.L.J. 1267 (4) NILKANTHA NILKANTHA NILKANTHA BALAPPA VS. RAJ AND CO., reported in BALAPPA VS. RAJ AND CO., reported in BALAPPA VS. RAJ AND CO., reported in AIR AIR AIR 1982 BOM. 388. 1982 BOM. 388. 1982 BOM. 388. 5. The learned Counsel for the respondents, on the other hand supported the impugned order and submitted that there was no written concluded contract or agreement and/or any deed regarding settlement of accounts of partnership and retirement of the petitioner. The learned Counsel for the respondents further submitted that the case of the petitioner was false and frivolous and that the respondents-defendants have good case on merits. He further submitted that partnership firm has no concern with the transaction between the respondent No.3 & 5 and the petitioner. It is [ 5 ] contended that the amounts were paid by the respondent No. 3 and 5 to the petitioner in cash and that the two cheques were to be retained by the petitioner as and by way of security without any deed of settlement or finalisation of accounts. It was further contended that there is arbitration clause in the partnership deed and therefore the petitioner can redress his grievance/dispute through arbitration. 6. The learned Counsel for the respondents placed reliance on the decisions in cases of (1) (1) (1) M/S. M/S. M/S. MACHALEE ENGINEERS & MANUFACTURERS VS. M/S. MACHALEE ENGINEERS & MANUFACTURERS VS. M/S. MACHALEE ENGINEERS & MANUFACTURERS VS. M/S. BASIC BASIC BASIC EQUIPMENT CORPORATION, reported in AIR 1977 EQUIPMENT CORPORATION, reported in AIR 1977 EQUIPMENT CORPORATION, reported in AIR 1977 SC SC SC 577 (2) HINDUSTAN PETROLEUM CORPORATION LTD. 577 (2) HINDUSTAN PETROLEUM CORPORATION LTD. 577 (2) HINDUSTAN PETROLEUM CORPORATION LTD. VS. VS. VS. PINKCITY MIDWAY PETROLEUMS, reported in PINKCITY MIDWAY PETROLEUMS, reported in PINKCITY MIDWAY PETROLEUMS, reported in (2003) (2003) (2003) 6 SCC 503 (3) THE COMMISSIONER OF INCOME 6 SCC 503 (3) THE COMMISSIONER OF INCOME 6 SCC 503 (3) THE COMMISSIONER OF INCOME TAX, TAX, TAX, WEST BENGAL VS. MESSRS A.W.FIGGIS & CO. & WEST BENGAL VS. MESSRS A.W.FIGGIS & CO. & WEST BENGAL VS. MESSRS A.W.FIGGIS & CO. & ORS., ORS., ORS., reported in AIR 1953 SC 455 (4) THE DEPUTY reported in AIR 1953 SC 455 (4) THE DEPUTY reported in AIR 1953 SC 455 (4) THE DEPUTY COMMISSIONER COMMISSIONER COMMISSIONER OF SALES TAX (LAW) BOARD OF OF SALES TAX (LAW) BOARD OF OF SALES TAX (LAW) BOARD OF REVENUE(TAXES) REVENUE(TAXES) REVENUE(TAXES) VS. VS. VS. M/S. K.KELUKUTTY, reported in M/S. K.KELUKUTTY, reported in M/S. K.KELUKUTTY, reported in AIR AIR AIR 1985 SC 1143 and (5) ADDANKI NARAYANAPPA & ANR 1985 SC 1143 and (5) ADDANKI NARAYANAPPA & ANR 1985 SC 1143 and (5) ADDANKI NARAYANAPPA & ANR VS. VS. VS. BHASKARA KRISHNAPPA (DEAD) THROUGH HEIRS & BHASKARA KRISHNAPPA (DEAD) THROUGH HEIRS & BHASKARA KRISHNAPPA (DEAD) THROUGH HEIRS & ORS.reported ORS.reported ORS.reported in AIR 1966 SC 1300. in AIR 1966 SC 1300. in AIR 1966 SC 1300. [ 6 ] 7. Having considered the rival contentions of the parties and perusing the material on record including the impugned order, in my view the statement of the respondents in their Application for leave to defend, that the respondent Nos. 3 and 5 have paid the respective amounts to the petitioner in ‘cash’ and therefore the four cheques were returned by the petitioner cannot be accepted. The Trial Court has unfortunately not considered this aspect and therefore the discretion exercised by it cannot be said to be judicious. Moreover, considering the fact that the execution of the writing dated 2.11.2005 and issuance of the two cheques is not denied, I am of the view that the respondents ought to have been put to some terms by the Trial Court to grant them leave to defend. Most of the decisions cited essentially deal with the technical issues relating to arbitration/partnership, which need not be gone into at this stage and can be raised at the time of Trial. 8. In this view of the matter, I direct the respondents to deposit 1/4th of the principal amount covering two cheques in the Trial Court on [ 7 ] or before 31th January, 2009. The Trial Court shall deposit the amount in a Fixed Deposit in a Nationalised Bank. It is made clear that if the amount so directed is not deposited in the Trial Court by the respondents within the aforesaid period, the leave granted to the respondents shall be taken as rejected and consequences in the suit in accordance with law, would follow. 9. It is noted that the Trial Court has already expedited the suit. Looking to the facts and circumstances of the case, interest of justice would be met if appropriate directions are given to the Trial Court to dispose of the suit by the end of December, 2009. Order accordingly. 10. With these directions, the petition stands disposed of. ..... [A.A.Sayed, [A.A.Sayed, [A.A.Sayed, J.] J.] J.] [ 8 ] 15.12.2008 To, The Section Officer, Civil Writ Petition Department, (Board Department) High Court, Bombay. Sir/Madam, As instructed by His Lordship Shri Justice A.A.Sayed I am informing you to place the Writ Petition No. 1945 of 2008 for pronouncement of order/judgment at 2.45 in Chamber No. 66-A of His Lordship Shri Justice A.A.Sayed on 17.12.2008. Yours faithfully, D.V.Godbole, PA to A.A.Sayed,J.