Contradictory Pleas Vitiate Defence; Drawer Liable Even If Signed Blank Cheque Was Handed Over: Delhi High Court

"Defence disclosed in the Leave to Defend Application by the Defendant/Appellant was illusory and did not disclose any substantial defence; it is indeed was sham and moonshine, as rightly held by the Ld. District Judge." Delhi High Court, in a significant ruling, held that a defendant taking mutually destructive and contradictory stands cannot be said to have raised a bona fide triable issue to secure leave to defend in a summary suit.

A single-judge bench of Justice Neena Bansal Krishna also reiterated that the liability of a drawer is not extinguished merely because a signed blank cheque was handed over to the payee.

The background of the case revolves around a summary suit instituted by the plaintiff for the recovery of Rs. 58,00,000 based on a dishonoured cheque. The defendant sought unconditional leave to defend, alleging that a portion of the money was forfeited earnest money for an unfulfilled property sale, while the rest was interest-free financial aid that had been largely repaid. The trial court dismissed the application for leave to defend and decreed the suit, prompting the defendant to file the present regular first appeal before the High Court.

The primary question before the court was whether the defence raised by the appellant disclosed any bona fide triable issues that would entitle him to the grant of leave to defend under Order XXXVII Rule 3(5) of the Code of Civil Procedure (CPC). The court was also called upon to determine the legal effect of a defendant claiming that the dishonoured cheque was originally handed over as a signed blank leaf for utility bills.

Maintainability Of Summary Suit On Dishonoured Cheque

Addressing the threshold objection regarding the maintainability of the suit under Order XXXVII CPC, the High Court clarified that a dishonoured cheque squarely falls within the statutory ambit. The bench observed that the suit was founded on a dishonoured cheque, which is a bill of exchange within the meaning of Section 6 read with Section 5 of the Negotiable Instruments Act, 1881, making it perfectly maintainable under Order XXXVII Rule 1(2)(a) CPC.

Contradictory Stands Destroy Bona Fide Defence

The court heavily scrutinized the shifting explanations provided by the appellant regarding a notarised receipt of Rs. 30,00,000. It was noted that in his reply to the legal notice, the appellant claimed the receipt was signed under coercion merely as security. However, in his application seeking leave to defend, he completely changed his stance, claiming the same amount was advance earnest money for a property sale which stood forfeited due to the plaintiff's default.

No Material To Substantiate Forfeiture Or Repayment

The bench found this defence inherently improbable and factually unsupported. The court highlighted that no Agreement to Sell was ever placed on record, nor was any notice of forfeiture ever given to the plaintiff. The court firmly noted that the complete falsity of the appellant's defence was evident from his own self-contradictions, characterizing the forfeiture claim as a sham defence taken in a vacuum.

Absence Of Documentary Proof For Alleged Cash Returns

Rejecting the appellant's claim that he had repaid Rs. 46,00,000 through cash and online transactions, the court emphasized the absolute lack of evidentiary backing. The bench observed that the assertion was entirely unsupported by any bank transaction or other documentary evidence, and no particulars had been furnished regarding the mode, date, or manner in which the alleged amount was returned.

Privity Of Contract And Joint Liability

The appellant also attempted to dilute his liability by arguing that the financial assistance was taken jointly with his wife. Dismissing this argument, the court invoked Section 43 of the Indian Contract Act, 1872, which allows a promisee to compel any one of joint promisors to perform the whole promise. The court held that since the cheque was issued solely by the appellant, the privity of contract for the entire recovery amount was established directly with him.

"The liability of the drawer is not extinguished merely because the particulars were filled in by the payee."

Defence Of Blank Cheque Not A Triable Issue

Tackling the appellant's contention that he had merely handed over a blank signed cheque for the payment of utility bills, the High Court found the explanation wholly absurd. The bench relied upon the Supreme Court's authoritative pronouncement in Bir Singh v. Mukesh Kumar, reiterating that when a signed blank cheque is voluntarily handed over by the drawer, the payee is legally entitled to fill in the amount.

Filling Blank Cheque Is Not Material Alteration

The court further clarified the doctrinal position regarding the completion of incomplete instruments. Borrowing from established precedent, the bench observed that filling in the particulars of a blank signed cheque does not constitute a material alteration vitiating the instrument. Consequently, the court held that even on the appellant's own case, the defence of misuse of a blank cheque failed to disclose a bona fide triable issue.

Ultimately, the High Court concluded that the appellant's admissions regarding the receipt of funds, coupled with his failure to establish any repayment or substantiate his contradictory defences, left no room for judicial interference. The court upheld the District Judge's findings, affirming that the defence was entirely illusory.

The High Court dismissed the appeal and upheld the trial court's judgment and decree dated November 8, 2023, granting recovery of Rs. 58,00,000 along with pendente lite and future interest at 9% per annum to the plaintiff.

Date of Decision: 24 July 2026