Parent society is liable for its unit’s debt where it issued repayment cheques and deducted TDS.

The Respondent (Plaintiff) filed a summary suit under Order XXXVII of the CPC for recovery of ₹17,81,531/- against several defendants, including the Appellant Society

In May 2017, the Respondent lent ₹15,00,000/- to Presidium School, Dwarka, for infrastructural development, evidenced by a Demand Promissory Note and a Receipt signed by an authorized signatory

The loan was to be repaid with 13% interest per annum

The Appellant (Defendant No. 3) subsequently issued three cheques—one for the principal and two for interest—which were all dishonored upon presentation due to signature discrepancies

The Appellant filed an application for Leave to Defend, asserting it was a separate legal entity from the "Presidium Educational & Charitable Trust" and that there was no privity of contract

The Trial Court dismissed the application and decreed the suit in favor of the Respondent

The Appellant challenged this decree before the High Court

1. Whether the suit was bad for misjoinder of parties or if the Appellant Society was a proper party to the suit despite being clubbed with another entity in the memo of parties

2. Whether there existed a privity of contract between the Respondent and the Appellant Society regarding the loan transaction

3. Whether the inclusion of interest in the claim exceeded the scope of a summary suit under Order XXXVII of the CPC

The court applied the summary procedure under Order XXXVII of the Code of Civil Procedure (CPC), which allows for a decree without a full trial if the defendant fails to raise a substantial or genuine triable issue

It relied on the principles of Order I Rule 10 of the CPC regarding the joinder and deletion of parties to determine that the school was a unit of the Society

The court further referenced the standard for granting leave to defend as established in B. L. Kashyap & Sons Ltd. v. JMS Steels & Power Corporation, noting that leave should be denied where the defense is frivolous or vexatious

The court rejected the Appellant’s contention regarding misjoinder, noting that while two entities were clubbed as Defendant No. 3, the Appellant Society had identified itself by providing its address as the school premises and was the entity managing the school per CBSE affiliation records

Regarding privity of contract, the court found that the dishonored cheques were issued by "Presidium School (A-U-O Lala Sher Singh Memorial Jeevan Vigyan Trust Society)," where "A-U-O" signified "A Unit Of"

The court emphasized that the Society had deducted TDS on interest payments as seen in the Respondent’s Form 26AS, which served as an admission of the loan liability

Finally, the court dismissed the argument that the suit fell outside Order XXXVII; it held that the interest was specifically stipulated in the Demand Promissory Note and further solidified by the fact that two of the dishonored cheques were specifically issued for interest amounts

The court concluded that the Appellant’s defenses were hyper-technical and failed to raise any genuine triable issues

The court held that the Appellant Society, as the parent body running the school, was the party responsible for the loan and the cheques issued

The court found no merit in the application for Leave to Defend as the liability was clearly established by the Promissory Note, the cheques, and the TDS deductions

The suit was properly maintainable under Order XXXVII as it was based on negotiable instruments and a written contract