Unsubstantiated Pleas of Repayment and Alleged Theft of Security Cheques Do Not Constitute Triable Issues under Order XXXVII CPC

The Appellants (Defendants) were sued by the Respondent (Plaintiff) under Order XXXVII CPC for the recovery of ₹50 lakhs based on two dishonored cheques of ₹25 lakhs each.

The Plaintiff alleged she advanced a personal loan of ₹25 lakhs in 2014, with an agreement that the Defendants would return ₹50 lakhs (principal plus profits) within three years.

The Defendants admitted receipt of ₹25 lakhs via bank transfer but contended: (i) the loan was commercial, requiring trial by a Commercial Court; (ii) the Plaintiff lacked a money-lending license; (iii) the loan was repaid in cash instalments; and (iv) one cheque was a security cheque while the other was stolen and forged.

The District Judge dismissed the Leave to Defend application and decreed the suit.

1. Whether the suit was maintainable in a non-commercial Civil Court given the business purpose of the loan.

2. Whether the suit was barred by the Punjab Registration of Money Lenders Act, 1938.

3. Whether the Defendants raised a "triable issue" regarding the repayment of the loan or the theft of the second cheque to merit unconditional leave to defend.

Order XXXVII Rule 3 CPC regarding the grant of leave to defend, as interpreted in IDBI Trusteeship Services Ltd. v. Hubtown Limited, which mandates that leave be refused if the defense is "moonshine".

Section 96 CPC for the first appeal.

Principles from Sripati Singh v. State of Jharkhand and Bir Singh v. Mukesh Kumar, holding that a signed cheque issued as security matures for presentation if the loan is not repaid by the due date.

The Punjab Registration of Money Lenders Act, 1938 was considered but held inapplicable to individual personal loans.

The Court found that the loan was essentially a personal friendly loan; the mere intent to use funds for business does not transform a private transaction into a "commercial dispute" under the Commercial Courts Act.

Because the Plaintiff was not in the business of money lending, the statutory bar for unlicensed lenders did not apply.

The Court noted that the Defendants admitted receipt of the principal and issued the first cheque; their plea of cash repayment lacked any supporting documentary evidence or receipts and was contradicted by their subsequent offer to pay ₹35 lakhs during trial proceedings.

The allegation that the second cheque was stolen was dismissed as "moonshine" because no Police Complaint or FIR was filed, and the Defendants failed to produce the 2017 "stop payment" instructions to corroborate the theft claim.

The High Court dismissed the appeal, upheld the District Judge’s decree for the recovery of ₹50 lakhs along with 9% simple interest per annum on the principal amount of ₹25 lakhs, and disposed of all pending applications.