Bombay High Court

Bombay High Court: In a commercial division summary suit instituted by Aziz Amir Ali (‘plaintiff’) who is former employee of a registered partnership firm (‘defendant 1’) which is engaged in the business of selling umbrellas for more than a century and has acquired goodwill in the market., for recovery of a sum of Rs. 1,20,00,000/- along with interest at the rate of 24% p.a. on the principal sum of Rs. 1 Crore, N.J. Jamdar, J. held the summary suit to be maintainable on confirmation of accounts through deposit receipt presented before Court.

The plaintiffs invested their lifetime savings with the defendants under the Collective Investment Scheme and invested a total sum of Rs. 1 Crore by cross payee cheques drawn in favor of defendant 1. In turn, the defendants issued credit notes and kept paying the money until January 2020 however stopped payment of interest from the month of February 2020. Thus, letters and legal notices were sent but to no response, present summary suit was filed.

Defendant 2 assailed the tenability of the suit under Order XXXVII Civil Procedure Code, contending that there is no contract between the plaintiffs and the defendants as alleged credit notes/deposit receipts do not constitute written contract.

The Court noted that the claim of the plaintiff is substantiated by the statements of bank accounts which evidence the transfer of amount to the account of defendant 1 through cheques. Particulars of the cheques are mentioned in the credit notes/deposit receipts, thus giving credence to the receipt of the amount of Rs. 1 Crore.

On the contention raised by the counsel for defendant that the transaction allegedly evidenced by credit notes does not partake the character of ‘deposit’, the Court placed reliance on Basant Lal Agarwal v. Lloyds Finance Ltd., 2003 SCC OnLine Bom 1129, to explain the distinction between ‘loan’ and ‘deposit’.

The Court observed that the credit note/receipt clearly acknowledges the receipt of the amount thereunder and the legal notices sent constitute a specific and unequivocal demand of the said amount.

On the thrust of the defense regarding absence of stipulation as to the ‘term of deposit’ implying no contract to repay the amount, the Court opined that the very acknowledgment of the receipt of the amount evidenced by the credit note/receipt gives rise to a contract to repay the said amount and the obligation becomes enforceable upon demand, e-ven in the absence of stipulation as to period of payment.

Placing reliance on Jyotsna K. Valia v. TS Parekh and Co., 2007 SCC OnLine Bom 413, wherein it was observed that a summary suit on the accounts duly confirmed by the defendants would be maintainable, thus, the Court did not accede to the challenge to the tenability of the suit on the ground that it is not based on a written contract.

The Court held that the defendants cannot be granted an unconditional leave to defend the suit when there is material to show that the receipt of the principal amount of Rs. 1 Crore is incontestable and borders on an admitted liability.

The Court directed defendants to repay a sum of Rs. 1 Crore within a period of six weeks from the date of this order, failing which the plaintiffs shall be entitled to apply for an ex-parte decree against the defendants after obtaining a non-deposit certificate from the Prothonotary and Senior Master of this Court.

[Aziz Amirali Ghesani v. Ibrabim Currim, 2022 SCC OnLine Bom 2300, decided on 14-09-2022]

Advocates who appeared in this case:

Mr. Rashmin Khandekar, a/w Ms. Karishni Khanna, i/b Amit Tungare, Ms. Jill Rodricks, Vinit Jain and Deep Dighe, Advocates, for the Plaintiffs;

Mr. Zain Mookhi, a/w Janhavi Doshi, i/b Maniar Srivastava Asso., Advocates, for the Defendant no. 2;

Mr. Jamshed Master, i/b Natasha Bhot, Advocates, for the Defendant no. 3;

Mr. Siddha Pamesha, a/w Declan Fernandes, i/b Purazar Fouzdar, Advocates, for the Defendant no. 4.

*Arunima Bose, Editorial Assistant has put this report together.

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