Case BriefsHigh Courts

Delhi High Court: Rekha Palli, J., without expressing any opinion on merits of the case, allowed an appeal filed by the appellant who was the defendant in a suit for recovery of money, against the order of the trial court whereby the suit was decreed against him without granting him leave to appeal.

The respondent alleged that the appellant borrowed Rs 12 lakhs from him for construction of a house. The money, he alleged, was paid in cash without any receipt. It was further alleged that the appellant issued a post dated cheque drawn on UTI Bank Ltd. for the repayment of the said amount. However, on presentation, the said cheques were returned by the Bank with remark “payment stopped by the drawer”. The respondent filed a complaint under Section 138 of the Negotiable Instrument Act, 1885 against the appellant. However, the said complaint was rejected by the Metropolitan Magistrate. Pursuant thereto, the respondent instituted the present suit under Order 37 CPC claiming recovery of the said Rs 12 lakhs along with interest. The appellant filed n application for leave to defend which was rejected by the Additional District Magistrate, and the suit was decreed against him.

C. Mohan Rao with Lokesh Kumar Sharma, Advocate appearing for the appellant contended that the trial court gravely erred in declining to grant leave to defend to the appellant even though the pleas raised by him clearly showed that his defence was fair and reasonable. Per contra, Rajshekhar Rao, Vinay Kumar and Raghav Kacker, Advocates representing the respondent supported the impugned order.

The High Court noted that the respondent claimed to have given the entire loan amount to the appellant in cash, without obtaining any receipt or acknowledgment reflecting such a  transaction. While the appellant did not dispute either the issuance of the cheque or his signature thereon, he specifically claimed that the cheque was never given to the respondent, but was given to his father in the year 2007 itself, as security for the chit fund amount which stood repaid. It also emerged from the record that the name of UTI Bank Ltd. stood changed to ‘Axis Bank Ltd.’ in 2007 itself, yet the cheque dated in the year 2013 — which the respondent claimed as having been issued by the appellant, was still drawn on a chequebook of UTI Bank Ltd. Coupled with this was the fact that respondent’s complaint filed under Section 138 NI Act was rejected. It was observed: “If the court finds that the defence is a wholly moonshine and sham, then leave to defend is liable to be rejected: but if the defence is found plausible, though not very probable, the Court would be justified in putting the defendant on terms while granting leave to defend.”

In the present case, the Court was of the opinion that the issue raised by the appellant was a plausible one. Thus, despite the fact that the appellant did not raise these vital issues specifically in his affidavit for leave to defend, the Court held that interest of justice demands that he be granted an opportunity to lead evidence in support of his defence, though the same had to be subject to conditions. Accordingly, he was granted leave to defend, subject to his depositing 50% of the principal amount with the trial court. The appeal was allowed and the order impugned was set aside.[Kadhirvel v. Vinod Kumar, 2019 SCC OnLine Del 9057, decided on 08-07-2019]

Case BriefsHigh Courts

Bombay High Court: V.M. Deshpande, J. dismissed an appeal filed against the order of the trial judge whereby he rejected the appellant’s application for condonation of delay in filing a complaint for an offence under Section 138 (dishonour of cheque) of the Negotiable Instruments Act, 1881.

Firstly, a complaint was filed for offence under Section 138 of the Negotiable Instruments Act by the appellant. Thereafter, he filed an application under Section 143(b) and the said was registered separately.

Notices on the said applications were issued. No step was taken by the appellant to serve the non-applicants. Not only that, he remained continuously absent. Consequently, the trial judge found that the appellant was not interested in prosecuting the case and, therefore, dismissed the application for condonation of delay as well as the complaint. Against the said, the present criminal appeal was filed.

The High Court observed: “When the complaint and/or proceedings are filed by the litigant before the Court of law, it is the onerous duty to prosecute the same diligently. The applicant cannot be dormant for years together as observed in the present case.” The Court opined that unless and until the non-applicants were served in the proceedings before the trial court, the said proceedings could not proceed further. Since it was a private complaint, it was the duty of the appellant to take all necessary steps to serve the non-applicants. It was said: Unnecessary filing of complaints and/or after filing of complaints, no step is taken and, therefore, the Courts are unnecessarily burdened and learned Judge below is unable to devote time for the litigants who are diligently prosecuting their proceedings has to remain in the queue.”

In such view of the matter, the Court dismissed the present appeal imposing costs of Rs 5000 on the appellant. [Ramzan Khan v. Khadim Tours and Travels, 2019 SCC OnLine Bom 709, decided on 24-04-2019]

Case BriefsHigh Courts

Tripura High Court: The Bench of Arindam Lodh, J. allowed a revision petition under Section 397 read with Section 401 of Code of Criminal Procedure, 1973 and set aside the lower courts’ order acquitting the accused in a case filed under Section 138 of the Negotiable Instruments Act, 1881.

Petitioner herein (complainant before lower court) gave a loan of Rs 3.6 lakhs to the accused in three installments against which the respondent issued three post-dated cheques. When the petitioner tried to encash these cheques, they were dishonoured with the remark ‘insufficient funds’ in the account of the respondent. The petitioner served a statutory demand notice upon the respondent which went unresponded. Thereafter, he filed a complaint in the Trial Court charging the accused for dishonour of cheque. The Trial Court dismissed the case holding that the demand notice was invalid as it did not bear the signatures of petitioner’s Advocate.  Respondent’s acquittal was affirmed and upheld by the learned Sessions Judge. Aggrieved thereby, the instant revision petition was filed.

The Court opined that the decisions arrived at by the lower courts were perverse and unwarranted on both the points of facts and law, hence not sustainable. It was held that Section 138 proviso (b) does not stipulate that the notice is to be sent through an advocate. Further, each page of the demand notice had been signed by the complainant himself, and thus it was a valid notice in terms of Section 94 of the NI Act. It was observed that the object of notice of dishonor of cheque to endorser is not to demand payment, but to indicate to the party notified that his contract arising on the negotiable instrument has been broken and he is liable for payment.

Reliance was placed on Sampelly Satyanarayana Rao v. Indian Renewable Energy Development Agency Ltd., 2016 SCC Online SC 954, where it was held that a post-dated cheque issued as security towards payment of installments of a loan transaction falls within the purview of Section 138 NI Act. In view thereof, it was held that the respondent was liable under Section 138 of NI Act, and he was ordered to pay a fine of Rs 3,60,000 to the petitioner as compensation, failing which, he would be sentenced to simple imprisonment of six months.[Subal Chandra Ghosh v. State of Tripura, 2019 SCC OnLine Tri 134, decided on 25-04-2019]

Case BriefsHigh Courts

Bombay High Court: C.V. Bhadang, J., set aside an order passed by the Magistrate whereby process was issued against the petitioner for an offence punishable under Section 138 read with Section 142 of the Negotiable Instruments Act, 1881.

The complainant gave a flat to the petitioner on leave and license basis. According to the complainant, the petitioner handed-over to her a cheque in the sum of Rs 12,000 drawn on State Bank of India, towards payment of license fee for one month. However, when presented for encashment, the cheque was returned dishonoured on account of “insufficient funds”. In such background, the complainant filed a complaint under Section 138 against the petitioner, in which the impugned order of issue of process was passed.

Galileo Francisco Teles, Advocate represented the petitioner. On the other hand, John Abreu Lobo, Advocate appeared for the complainant.

The High Court noted that the petitioner simply handed over the cheque in question to the complainant, allegedly towards payment of one month’s license fee. It was not a case that the cheque was issued by the petitioner, much less on his account with SBI. There was letter produced from SBI stating that the account number on which the cheque was issued did not stand in name of the petitioner. The Court observed, “It is trite that a complaint under Section 138 of the Act, lies only against the drawer of the cheque, when the cheque issued by the drawer, on his account is dishonoured for want of funds. It was not seriously disputed during the course of the arguments at bar that the petitioner is neither a drawer nor the cheque is issued on his account. It is thus difficult to see as to how, process can be issued against the petitioner in the absence of the basic requirements of the offence under Section 138 of the Act being satisfied.” Stating thus, it was held that the impugned order was not sustainable and was therefore set aside. [Hiralal Govekar v. Sheela Surlakar, 2019 SCC OnLine Bom 507, dated 20-03-2019]