Mohammad Ayoub Challoo vs JUDGEMENT

J&K Bank, Branch Safakadal, Srinagar. A notice was served upon appellant/defendant. He caused appearance. He filed an application seeking leave to defend the suit. The Trial Court allowed appellant’s application vide order dated 7th September 2017. Appellant was given leave to defend subject to furnishing of bank guarantee in the amount of 1 RFA no.21/2019 CM no.3917/2022 Rs.6,20,000/- within twenty days. Appellant, however, filed an application to review/modify order dated 7th September 2017. Objections to the said application were filed by respondent/plaintiff. The application was dismissed vide order dated 23rd January 2019. Nevertheless, he was given time and opportunity to submit bank guarantee. Appellant did not furnish bank guarantee. Finally, the Trial Court passed impugned judgement.

3. The grounds of challenge taken in the appeal are: a. that judgement dated 10.04.2019 is illegal, contrary to law and justice and has been passed in clear violation of mandatory provisions of Order 37 CPC; b. that illegality of impugned judgement is writ large on the face of it as there is no liability or any payable debt in favour of respondent, against which alleged cheque has been drawn in favour of respondent; c. that documents annexed by appellant with application for grant of leave to defend were not considered by the Trial Court; d. that bills issued in the shape of retail invoice and also submission of retail invoices allegedly shows the supply of spare parts in the name of appellant and same being the basis for issuance of cheque for the amount due from appellant to respondent which have been categorically negated by the statement submitted by respondent himself to the Sales Tax Department, Srinagar, and bills allegedly showing articles purchased by appellant from defendant but the same bills and invoices submitted to Sales Tax Department show that the bill/invoice is not in respect of articles purchased by appellant from respondent but shows same is with regard to the cash, not supply of goods purchased by appellant on loan. Despite these facts, the Trial Court granted leave with conditions; e. that fraudulently respondent retained cheque bearing no.680724 dated 7th July 2015 and the same is borne from the statement of the bank concerned. The statement of the bank with regard to other 2 RFA no.21/2019 CM no.3917/2022 cheques clearly show that the cheque relied upon by respondent had been illegally kept by respondent with himself and by deceitful means, signature of appellant had been obtained on the cheques and thereafter the amount and other details had been manipulated by respondent and contents of cheque with regard to the amount, name of drawee etc., were not the handwriting of the appeal. The police report in this behalf is categoric and after enquiry the police submitted the report that cheque attributed to appellant is sheer manipulated made by respondent with the aid of his father, Noor Mohammad Challoo. The report of the police also mentions that appellant was salesman working with Noor Mohammad Challoo (father of respondent herein) and for some time, has acted as a partner and thereafter appellant left the job of salesman and Noor Mohammad Challoo (father of respondent) had on the intervention of local shopkeepers, signed an acknowledgement. The account opened in the name of appellant was established by police to be fictitious account in order to manage and manipulate transaction with an aim to avoid tax and other liabilities. The detailed report of the police in this behalf was brought to the notice of the Trial Court; even then, unconditional leave was refused; f. that as per report of the police, the conclusion drawn by police is that the whole affair had been manipulated and forged by respondent and it was recommended under law be taken against respondent; g. that impugned judgement and decree is based on no evidence and no proof and the same has been passed against the mandatory provisions of Order 37 CPC.

4. I have heard learned counsel for parties and considered the matter.

5. Impugned judgement has discussed all aspects of the matter, including provisions of Order 37 CPC, which, therefore, need not be reproduced here again. Nevertheless, it is pertinent to mention here that Order 37 CPC provides for summary procedure as it has been made to prevent unreasonable obstruction from defendant. Unlike other civil suits, the 3 RFA no.21/2019 CM no.3917/2022 trial in summary suits begins after the court grants leave to defendant to contest the suit. The court, dealing with summary suits, can pass judgement in favour of plaintiff if defendant does not apply for leave to defend or if such application is made but refused or defendant is permitted to defend but he fails to comply with conditions on which the leave to defend is granted. Sub-Rule 2 of Order 37 CPC makes it applicable to all suits upon bills of exchange, hundies and promissory notes or the ones in which a plaintiff seeks only to recover debt or liquidated demand in money payable on a written contract, an enactment where the sum to be recovered is a fixed sum of money or in nature of any debt except penalty, a guarantee in respect of a debt or liquidated demand. Rule 2(3) of Order 37 CPC provides the procedure for appearance of defendant which is within 10 days from service of summons on him. After causing appearance, plaintiff serves on defendant the summons for judgments within ten days from the date of service. Rule 2(5) envisions that defendant may within 10 days from service of such summons for judgments by affidavit or otherwise disclose such facts as may be deemed sufficient to entitle him to defend, apply for leave to defend and it may be granted to him unconditionally or upon such terms as may appear to the Court to be just. Further, the proviso indicates that leave to defend shall not be refused unless the Court is satisfied that the facts disclosed do not indicate a substantial defence or that the defence is frivolous or vexatious. Rule 2(6) states that in case the Defendant does not apply for a leave to defend, (a) the Plaintiff shall be entitled to judgments immediately or (b) the Court may direct the Defendant to give such security as it may deem fit. Sub-clause 4 RFA no.21/2019 CM no.3917/2022 7 provides that in case sufficient cause is shown, the delay in entering an appearance or in applying for leave to defend the Suit may also be excused.

6. Perusal of the record would reveal that on 17th September 2015, respondent/plaintiff filed a suit under Order 37 CPC before the Trial Court for recovery of Rs.6,20,000/-. In his plaint, respondent/plaintiff maintained that he was managing partner of the firm M/s Northern Motor Corporation, dealing in supply of motor parts and accessories and that appellant/defendant approached him for supply of motor parts and accessories. Appellant/defendant is said to have issued a motor for Rs.6,20,000/- and issued cheque no.680724 on 7th July 2015. The plaintiff/ respondent is stated to have presented aforesaid cheque before J&K Bank Branch Safa Kadal on 17th August 2015, but cheque was dishonoured for reasons “insufficient funds”. According to plaintiff/ respondent, defendant was requested to make payment but he avoided and, as such, a demand notice was issued on 25th August 2015 to defendant/ appellant but he did not take any positive step for repayment of the said amount. This, according to respondent/plaintiff, compelled respondent/plaintiff to file the suit for recovery of Rs.6,20,000/- along with interest and cots of Rs.50,000/-. When the suit was filed, notice as required under Order 37 CPC was served upon appellant/defendant. He caused his appearance and filed an application for seeking leave to defend the suit. The Trial Court vide order dated 7th September 2017 allowed the application for leave to defend the suit subject to the condition that defendant/appellant would furnish bank guarantee in the amount of 5 RFA no.21/2019 CM no.3917/2022 Rs.6,20,000/-. However, appellant/defendant did not furnish bank guarantee. He filed application for review/modification of order dated 7th September 2017. Perusal of file as also impugned judgement reveals that appellant/defendant caused appearance before the Trial Court on 11th March 2019. Opportunity to furnish bank guarantee sought by him was granted. On 15th March 2019, appellant/defendant sought opportunity to furnish bank guarantee and to this extent he affixed his signatures on the margin of the order sheet, whereby he admitted and conceded that in case he failed to furnish bank guarantee by or before next date of hearing, his defence would be closed and respondent/plaintiff would be entitled for grant of decree. Thereafter, appellant/defendant, however, failed to cause his appearance and furnish bank guarantee. As a result whereof, the impugned judgement came to be passed.

7. As noted above, an application seeking leave to defend had been preferred by appellant/defendant before the Trial Court, in which all those enunciations had been mentioned by appellant/defendant, which he has taken in the appeal in hand. The Trial Court found that though defence taken by appellant seemed to be illusory and sham, yet right to defend the suit was granted in favour of appellant/defendant subject to the condition that defendant would deposit an amount of Rs.6,20,000/- in the court or in alternative pay or deposit cash security of Rs.6,20,000/- in the shape of bank guarantee in the court or demand draft within a period of 20 days. All that was required of Trial Court in summary proceedings as envisaged under and in terms of provisions of Order 37 CPC, has been followed and complied by the Trial Court and as a result 6 RFA no.21/2019 CM no.3917/2022 of which, impugned judgement need not be interfered and consequently the appeal is liable to be dismissed.

8. For the reasons discussed above, the appeal is dismissed. Interim direction, if any, shall stand vacated.

9. Record be sent down. CM No. 3917/2022 In view of dismissal of appeal – RFA no.21/2019, application is allowed and Registry is directed to release the amount deposited by appellant in favour of respondent/applicant after proper identification. CM disposed of. (Vinod Chatterji Koul) Judge Srinagar 16.05.2023 “Mohammad Yasin Dar” Whether approved for reporting? Yes/No. 7 RFA no.21/2019 CM no.3917/2022