The Delhi High Court while granting Leave to Defend following the principles laid down by the Supreme Court in IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd. , 2016 Latest Caselaw 808 SC reiterated that summary suits cannot be decreed solely based on stale cheques.
Brief Facts of the Case:
The Respondent advanced a friendly loan of 53.5 Lakhs to the Appellant in December 2015. The Appellant issued a cheque for the repayment of the loan but he same was dishonored by the bank. After several requests from the Respondent, the Appellant again issued 5 cheques, each for a sum of INR 8 Lakh with a request to present each cheque for encashment for 5 consecutive months starting from September 2016.
The Appellant also promised to return the remaining 13.5 Lakhs on interest within a short period. However, the cheques issued earlier were again dishonored by the bank on the endorsement of insufficient funds in the Appellant’s bank account. Despite repeated requests, the Appellant failed to repay the said loan and the Respondent filed a police complaint with additional charges filed under the Negotiable Instruments Act, of 1881. A summary suit was also filed by the Respondent under CPC Order against the Appellant. On serving the summons under the directed Order, the Appellant entered an appearance and filed an application seeking leave to defend.
Contentions of the Appellants:
It was asserted by the Appellant’s Counsel that a cheque which had been dishonored by the reason of it being outdated or stale, cannot give rise to a suit for recovery under Order XXXVII CPC and that the said cheque was obtained via fraud with certain material alterations being made to it. This issue had been raised by the Appellant by way of his application seeking leave to defend but it was overlooked and dismissed by the Trial Court.
Contentions of the Respondents:
The Respondent’s Counsel countered by contending that the Appellant failed to raise the issue with respect to the subject cheque being stale/outdated before the learned Trial Court and there exists no averment in his application seeking leave to defend with regard to the validity of the said cheque.
It was argued that the Appellant was barred from taking any fresh plea under Section 96 of the CPC which states that an appeal can be preferred only when there is a “question of law” emanating out of a decree in any suit. Furthermore, the dishonoring of the cheque couldn’t be attributed to the respondent but it was the deliberating issuing of the same without a bar code by the Appellant.
Observations of the Court:
It was observed by the court that the summary suits cannot be decreed solely based on the stale cheques. However, if it is supported with other evidences, especially, written acknowledgments/promissory notes etc., the same may be decreed. The Court while relying on the case Baldev Singh, held that the subject cheque was not supported with any further evidence such as written instruments/promissory notes etc. and thus, the Appellant was held entitled to conditional leave.
Decision of the Court:
The impugned order of the Trial Court was set aside and Appeal was allowed.
Case Title: Ms. Deep Shikha @ Dolly vs Smt. Archana Jain
Case No.: RFA 355/2022
Coram: Hon’ble Mr. Justice Gaurang Kanth
Advocates for Petitioner: Mr. Anil Mishra, Mr. Arvind Kumar, Mr. Vineet Kumar Singh and Ms. Supantha Sinha, Advocates.
Advocates for Respondent: Ms. Chaitali Jain and Mr. Yogesh Saini, Advocates
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