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2007 DAILYLAW 2432 (DEL)

ROHINI STRIPS LTD v. STEEL AUTHORITY OF INDIA LTD

2007-09-28

Sanjiv Khanna

body2007
MUKUNDAKAM SHARMA, CJ. ( 1 ) THIS appeal is directed against the judgment and order dated 17th August, 2007 passed by the learned Single Judge decreeing the suit filed by the respondent-plaintiff for recovery of an amount of Rs. 5,51,74,220/- along with interest. The said suit was filed by the respondent for recovery of the said amount under order XXXVII of the Code of Civil Procedure as a Summary Suit. The aforesaid summary Suit was based on two cheques which were issued by the appellants, which when presented by the respondent were dishonoured. Consequently, the suit was filed in terms of Order XXXVII Code of Civil Procedure seeking decree for realisation of the aforesaid amount along with the interest. ( 2 ) THE appellant had filed an application under Order XXXVII Rule 3 (5) of the CPC praying for grant of leave to defend the suit. The said application was taken up for consideration by the learned Single Judge and on a detailed examination of the records and the pleadings of the parties, the said application was dismissed on the ground that the defence taken by the appellant was sham and illusory and, therefore, the appellants were not entitled to leave to defend the suit and the plaintiff-respondent was entitled to have the judgment in terms of the provisions of the Order XXXVII of CPC. Consequently, the decree was passed as against which the present appeal is filed by the appellants. ( 3 ) THE first submission that is made by the counsel appearing for the appellant is with regard to the findings recorded by the learned Single Judge rejecting the contention of the appellant that the suit is barred by limitation. The contention that was made in the application filed seeking leave to defend was that the suit filed by the respondent-plaintiff was barred by limitation as the same was filed after three years from the date mentioned on the cheques,i. e. , 16. 3. 2000. In support of the contention the learned counsel appearing for the appellant referred to the provision of Section 6 of the Negotiable Instruments act, 1881 which defines "cheque" which reads as follows:-Section 6 "cheque":- A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. " ( 4 ) LEARNED counsel appearing for the appellant stated that we should read the said provision along with Article 35 of the Limitation Act, 1963 which reads as under:- "article 35:- On a bill of exchange or promissory note payable on demand and not accompanied by any writing restraining or postponing the right to sue. Period of limitation " Three years. Time from which period begins to run:- The date of the bill or note. " ( 5 ) ON a joint reading of both the provisions, counsel for the appellants submits before us that the suit filed by the respondent-plaintiff was barred by limitation as the date when the suit was filed was 23. 5. 2003. ( 6 ) THE aforesaid contention was also raised before the learned Single Judge who has rejected the same holding that the aforesaid two cheques although both dated 16. 3. 2000, were presented to the banker for encashment and the same were returned to the respondent on the ground that funds "not arranged for" on 1. 6. 2000. Therefore, the limitation would start running only from 1. 6. 2000. ( 7 ) WE find no illegality in the aforesaid order. The cheques were given by the appellants to the respondent only on 16. 3. 2000. The aforesaid cheques were to be encashed after presentation in terms of Section 64 of the Negotiable Instruments act, 1881. The cause of action in the suit was dishonour of the cheque and not merely issuance of the cheque. On issue of cheque, the suit could not have been filed. Only on dishonour of the cheques that the right to sue accrued. The said cheques were returned back to the respondent unpaid on the ground "not arranged for" on 1. 6. 2000 and, therefore, the period of limitation would start running from the said date. The suit was filed on 23. 5. 2003. The suit was within the period of limitation consequently the aforesaid findings recorded by the learned Single Judge in respect of the plea of limitation cannot be said to be erroneous in any manner. ( 8 ) THE next contention that was raised before us is in respect of what has been described as adjustment. It is contended before us that although the aforesaid amount of Rs. 2,41,31,153/- and also the amount of Rs. ( 8 ) THE next contention that was raised before us is in respect of what has been described as adjustment. It is contended before us that although the aforesaid amount of Rs. 2,41,31,153/- and also the amount of Rs. 1,21,68,443/- for which cheques were issued was admittedly payable to the respondent, but the appellant was also entitled to certain adjustments towards MODVAT amount, conversion charges and Central Excise charges. According to the counsel appearing for the appellant the same were required to be adjusted. ( 9 ) THE said contention was also rejected by the learned Single Judge by referring to the correspondence between the parties, particularly, the letter dated 16. 3. 2000. Mere reliance to the observations and findings recorded by the learned Single Judge in the impugned order would be enough to negate the contention of the counsel appearing for the appellant. The two cheques one of rs. 2,41,31,153/- and another of Rs. 1,21,68,443/- were given by the defendant no. 1 to the plaintiff along with a covering letter dated 16. 3. 2000 which reads as under:- " This refers to our huge overdue outstanding of Rs. 3,62,98,575. 00 (Rupees Three Crore Sixty Two Lakh Ninety Eight Thousand Five Hundred Seventy five only) in respect of the principal amount as well as interest thereon calculated upto 16. 03. 2000. I am enclosing cheque No. 0761670 dated 16. 3. 2000 drawn on Central Bank of india, Malanpur, Distt. Bhind, M. P. for Rs. 2,41,30,153. 00 (Rupees Two Crore Forty one Lakh Thirty Thousand One Hudnred Fifty Three Only) towards principal. Further, cheque No. 0761671 dated 16. 03. 2000 for Rs. 1,21,68,443. 00 (Rupees One crore Twenty One Lakh Sixty Eight Thousand Four Hundred Forty Three Only) drawn on Central Bank of India, Malanpur, Distt. M. P. towards interest accrued till date is also enclosed. We request you to kindly return all the cheques submitted to you earlier in this regard. Thanking you yours faithfully, for ROHINI STRIPS LIMITED sd/- (ALOK AGARWAL)DIRECTOR " ( 10 ) THE issuance of the aforesaid letter and contents of the letter have never been contested by the defendants at any stage. The alleged adjustment pertains to the period between September, 1994 and January, 1995, long before letter dated 16. 3. 2000 was written. In our considered opinion there is a clear admission that dues of the respondent of Rs. The alleged adjustment pertains to the period between September, 1994 and January, 1995, long before letter dated 16. 3. 2000 was written. In our considered opinion there is a clear admission that dues of the respondent of Rs. 3,62,98,596/- were payable as on 16. 3. 2000. No question of adjustment was raised. In the said letter dated 16. 3. 2000, which is the later in point of time, did not at all refer to any adjustment to be made or which may be made. The contention and claim for adjustment is an after though. ( 11 ) COUNSEL appearing for the appellant has drawn our attention to letter dated 24th June, 2000 annexed with the memorandum of appeal as Annexure-8. The said letter was admittedly issued after the aforesaid cheques were dishonoured by the bank on presentation. The said cheques were returned by the bank unpaid to the respondent under bank memo 1. 6. 2000 and, therefore, it is clearly established that the aforesaid letter dated 24th June, 2000 is subsequent to the date of return of the said cheques by the bank to the respondent. In our view, reliance by the counsel for the appellant on the said letter is misplaced. ( 12 ) AT the end, counsel appearing for the appellant has raised the issue relating to the payment of interest. The respondents had claimed interest @ 25% per annum which according to the respondent was claimed at the market rate for commercial transactions. The learned Single Judge after considering the entire case has awarded interest @ 12% p. a. on the decreetal amount from the date of institution of the present suit till realization. In our considered view the interest awarded @ 12% is legal and justified. ( 13 ) THE appeal is devoid of any merit and the same is dismissed accordingly.