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Delhi High CourtIndian Cases

Hira Nand Dhingra vs Corporation Bank And Anr. on 26 July 2006

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Delhi High Court
Hira Nand Dhingra vs Corporation Bank And Anr. on 26 July, 2006
Equivalent citations: 134(2006)DLT329
Author: Sanjay Kishan Kaul
Bench: Sanjay Kishan Kaul
JUDGMENT

Sanjay Kishan Kaul, J.

1. Admit.

2. The petition raises an interesting question of law as to whether a summary suit under Order 37 of the Code of Civil Procedure, 1908 (herein-after referred to as the said Code) can be maintained on the basis of a bank draft which has been dishonoured.

3. The petitioner is the plaintiff before the trial court and a bank draft was issued by respondent no.1 at the behest of respondent no.2 who handed over the bank draft to the petitioner for settlement of the charges of the petitioner for services rendered. The bank draft was returned on account of the fact that it was alleged that a duplicate bank draft had been issued. The trial court has held that a summary suit under Order 37 of the said Code is not maintainable in case of a bank draft.

4. In order to appreciate the controversy, the provisions of Order 37 of the Code are re-produced herein as under:

ORDER xxxvII
1. Courts and classes of suits to which the Order is to apply-
1) This order shall apply to the following Courts, namely; –
a) High Courts, City Civil Courts and Courts of Small Causes; and
b) other Courts:
Provided that in respect of the Courts referred to in Clause (b), the High Court may,by notification in the Official Gazette, restrict the operation of this Order only to such categories of suits as it deems proper, and may also, from time to time, as the circumstances of the case may require, by subsequent notification in the Official Gazette, further restrict, enlarge or vary, the categories of suits to be brought under the operation of this Order as it deems proper.
2) Subject to the provisions of Sub-rule (1), the Order applies to the following classes of suits, namely:
a) suits upon bills of exchange, hundies and promissory notes;
b) suits in which the plaintiff seeks only to recover a debt or liquidate demand in money payable by the defendant, with or without interest, arising,- (1) on a written contract; or (2) on an enactment, where the sum sought to be recovered is a fixed sum of money payable by the defendant, with or without interest arising, – (3) on a guarantee, where the claim against the principal is in respect of a debt or liquidated demand only.
5. Learned Counsel for the petitioner submits that a bank draft is a bill of exchange and thus is covered under Clause (a) of sub Rule (2) of Rule (1) of Order 37 of the Code. In this behalf, learned Counsel has referred to the judgments in Indian Companies Act of 1913 v. New Bank of India Ltd., Amritsar AIR 1949 East Punjab 373, Birbhum Central Cooperative Bank Ltd. v. Pioneer Bank Ltd. , Polavarapu Venkataswarlu v. Polavarapu Subbayya and Sidhnath v. Punjab National Bank Ltd. ; and State Bank of India and Anr. v. Jyoti Ranjan Mazumdar and Anr. . All these judgments are to the similar effect that a bank draft is a bill drawn either on demand or otherwise by one bank on another in favor of a third party and is a bill of exchange. It has been held to be a negotiable instrument. It has been further observed that the definition of the term ‘bill of exchange’ shows that it is a negotiable instrument as defined under Section 13 of the Negotiable Instruments Act.

6. I am in full agreement with the views expressed in these judgments and in my considered view there is little doubt that a draft is a bill of exchange.

7. The trial court seems to have relied upon the judgment of the learned single Judge in Lal chand Jain v. Smt. Gheesi and has observed that it has been held there that a draft is not a bill of exchange. On a perusal of the judgment, it is apparent that there is no such observations made and the trial court seems to have completely misread or not read the judgment in Lalchand Jain’s Case (supra). The case dealt with a situation where the bank draft in question was not drawn in favor of the plaintiff in the suit. It was thus held that a summary suit under Order 37 of the Code wouled not be maintainable by the plaintiff until and unless the draft is drawn in favor of the plaintiff. There was no other written contract between the parties for the alleged loan transaction and the bank draft was held not to be a written contract.

8. In view of the aforesaid, the impugned order is set aside and it is held that the bank draft is a bill of exchange and the suit of the petitioner based on the bank draft is maintainable under Order 37 of the Code.

9. It is directed that the trial court will now issue summons to the respondents in the prescribed form.

10. The parties to appear before the trial court on 10.08.2006.

11. A copy of the order be also sent to Mr. Satish Kumar, Metropolitan Magistrate, New Delhi who passed the order.