IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF NOVEMBER, 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.349 OF 2015 BETWEEN:
1. M/s Economic Transport Organisation Having its office at 70/1, Mission Road, Bangalore 560 027 Represented by its Partner Mr. Sudharshan Kumar Arya.
2. Mr. Sudharshan Kumar Arya, Partner M/s Economic Transport Organisation Having its office at 70/1, Mission Road, Bangalore 560 027 .. Appellants ( By Sri Sundaramurthy & R Anand Kumar, Advocates) AND:
Mr. Yathish Jain, S/o Sri Satish Jain, No.26, 16th Cross, 5th Phase, J.P.Nagar, Bengaluru 560 070 Represented by its GPA holder, Mr. Anil Kumar Jain, ..Respondent ( By Sri Chidambara G.S., Advocate ) This Regular First Appeal is filed under Section 96 of CPC against the judgment and decree dated 20.1.2015, passed in O.S.No.9202/2006, on the file of the XXX Addl. City Civil Judge, Bengaluru, decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing, this day, the Court delivered the following:
JUDGMENT The present appellants were defendant Nos.1 and 17, against whom along with other 20 defendants, the present respondent as a plaintiff had instituted a suit in O.S.No.9202/2006 in the Court of the learned XXX Addl. City Civil Judge, Bengaluru (henceforth referred to as ‘Trial Court’) for recovery of a sum of `1,00,000/- with costs and interest at the rate of 24% per annum from the date of the suit till realisation.
2. The summary of the case of the plaintiff in the trial Court was that, on 11.12.2001, the defendants had taken a hand loan from him of a sum of `.1,00,000/-
assuring him of paying interest at the rate of 2% per month till the principal amount is not returned to the plaintiff. At the same time, the defendants had issued a cheque for a sum of `1,00,000/- drawn on bank of Madura Ltd., N.R.Road Branch, Bangalore-560 002, in favour of the plaintiff, which cheque was issued by the defendants’ Power of Attorney Holder on behalf of the defendants in the presence of one of their partner i.e., defendant No.17. Said cheque was given to the plaintiff stating that in the event of non-payment of money by the defendants, the plaintiff can proceed in action for recovery of the amount.
It is further the contention of the plaintiff that the defendants failed either to pay the interest or principal amount despite his several requests and reminders. This made the plaintiff to cause a legal notice upon the defendants on 11.09.2006. Despite service of legal notice, since the defendants failed to pay the loan amount with interest thereupon, the plaintiff was constrained to institute a suit against them. With this, the plaintiff has sought for a decree for a sum of `1,00,000/- against the defendants along with interest thereupon at the rate of 24% per annum from the date of filing of the suit till the date of realisation of the amount together with costs of the suit.
3. Responding to the summons, defendant Nos.1 and 17 alone appeared through their counsel. The suit against defendant Nos.2 to 16, 18 and 22 got dismissed. It is defendant No.17, who has filed his written statement. The said defendant in his written statement denied the plaint averment that the defendant No.1 had ever borrowed loan of `.1,00,000/- from the plaintiff and defendant No.22 had issued a cheque for a sum of `.1,00,000/- to the plaintiff on behalf of defendant No.1 - Firm towards repayment of the alleged loan. The said defendant also contended that defendant No.22 is the brother of the plaintiff, who in his tenure in the office of defendant No.1 had misappropriated funds of the first defendant and apprehending criminal proceedings likely to be initiated against him, had remained absent from the office and thereafter has opted to file a Industrial Dispute before the Labour Court, Bengaluru, in I.D.No.514/2006. He resigned from his office under defendant No.1 on 14.06.2003.
The defendant No.17, in his written statement also denied the alleged agreement towards payment of interest, much less at the rate of 2% per month. He also contended that the suit was barred by limitation.
4. Based on the pleadings of the parties, the trial Court framed the following issues:
1) Whether the plaintiff proves that the defendants have availed hand loan of Rs.1,00,000/- on 11/12/2002 to agreeing to repay the same with 2% interest thereon?
2) Whether the plaintiff further proves that the defendants have issued cheque of Rs.1,00,000/- by their power of attorney i.e., defendant No.7 towards discharge of said loan?
3) Whether the plaintiff is entitled to 24% interest thereon?
4) Whether the defendants prove that the suit of the plaintiff is barred by the limitation?
5) What order or decree?
On behalf of the plaintiff one Sri. Anil Kumar Jain, said to be the General Power of Attorney holder of the plaintiff was examined as P.W.1 and documents from Exs.P.1 to Exs.P.4 were marked. One Sri C.K. Vijendren, said to be the Power of Attorney Holder of 17th defendant got examined as D.W.1. From the side of the defendants’ three documents Exs.D1 to Exs.D.3 were marked. The trial Court after hearing both side, by its judgment and decree dated 20.01.2015 while answering issue Nos. 1 to 3 in the affirmative and issue No.4 in the negative decreed the suit of the plaintiff for a sum of `.1,00,000/- with cots and interest at the rate of 24% per annum from the date of the suit till realisation as against defendant Nos.1 and 17 jointly and severally and dismissed the suit as against defendants Nos.2 to 16 and 18 to 22. Challenging the said judgment and decree, defendant Nos.1 and 17 before the trial Court have preferred this appeal.
5. Lower Court records were called for and the same are placed before this Court.
6. Heard the arguments of the learned counsel from both side and perused the materials placed before this Court, including the memorandum of appeal and the impugned judgment.
7. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court.
8. The points that arise for my consideration are:
i) Whether the plaintiff has proved that defendant N1.1 and 17 are liable to pay him the suit claim of `.1,00,000/- with interest thereupon?
ii) Whether the suit is barred by time?
iii) Whether the judgment and decree under appeal warrants any interference at the hands of this Court?
9. P.W.1 in his examination-in-chief, in the form of affidavit evidence has reiterated the contentions taken up by the plaintiff in his plaint. P.W.1 in order to show that he has been authorised as a Power of Attorney Holder to appear for the plaintiff and to conduct the case, has produced his Power of Attorney and got it marked at Ex.P.1. To substantiate his claim that the defendants had issued him a cheque dated 20.04.2005 for a sum of `.1,00,000/- towards repayment of the loan, he has produced a cheque bearing No.023842 drawn on Bank of Madura Ltd., N.R.Road, Bangalore-560 002 by defendant No.1 - Firm through his attorney for a sum of `.1,00,000/- at Ex.P.2.
He also produced copy of the legal notice said to have been issued to the defendants on his behalf at Ex.P.3. He has produced the postal acknowledgement card at Ex.P.4. He was subjected to detailed cross-examination, where he adhered to his original version.
10. D.W.1 also reiterated the summary of the contention of the defendants taken up in their written statement, even in his examination– in-chief filed in the form of affidavit evidence. He has produced letter of authority shown to have been issued by defendant No.17 at Ex.D.1 and certified copy of the award dated 24.12.2010 and I.D.No.514/2006, by the learned I Addl. Labour Court, Bangalore at Ex.D.2 and certified copy of the order dated 28.11.2011 passed by the co-ordinate Bench of this Court in W.P.No.16163/2011 at Ex.D.3. The witness was cross-examined before the plaintiff’s side, wherein he adhered to his original version.
11. In the light of the above, argument of the learned counsel for the appellants’ was that, the plaintiff has not proved that there was a loan taken by the defendants, when in fact, the defendant in the written statement as well D.W.1 have clearly stated that they have not borrowed the loan. He also submitted that the plaintiff is admittedly younger brother of defendant No.22, which defendant was serving under defendant No.1 and later resigned from the job due to misappropriation of funds of defendant No.1. As such, with vengeance he has stolen the cheque from defendant No.1 - Firm and handed it over to his brother, who is the plaintiff, who based upon the said cheque has instituted the present suit. He also submitted that P.W.1 is the uncle of the plaintiff, as such, it is a collusive suit between the plaintiff, defendant No.22 and PW1. He, finally submitted that the suit was barred by time. Further as on the date of the cheque admittedly, defendant No.22 was not in the service of defendant No.1-Firm, as such the very cheque looses its significance.
12. Per contra, learned counsel for the respondent in his argument submitted that the appellants have nowhere denied that the cheque at Ex.P.2 belongs to defendant No.1 - Firm. Further defendant No.17, no where in the written statement has taken a contention that thesaid cheque was stolen by defendant No.22. When the issuance of cheque is not in dispute, presumption under Section 118(a) of the Negotiable Instrument Act with respect to consideration forms in favour of the plaintiff. Finally, he submitted that there is no pleading and no proof regarding the alleged collusion between the plaintiff, defendant No.22 and P.W.1. He also submitted that the suit is well within time and the trial Court since has considered all these aspects in its proper perspective and has come to a right conclusion, decreeing the suit, the same does not warrant any interference at the hands of this Court.
13. Admittedly, in the case on hand, except the cheque at Ex.P.2, there are no other documents to show the alleged loan transaction between the plaintiff and defendants. Even P.W.1 in his cross-examination has clearly stated that, except Ex.P.2, there are no other documents to show giving of loan by the plaintiff to the defendants. Thus, it is only Ex.P.2 and the oral evidence of the parties are the available materials to ascertain about the alleged existence of loan.
14. The plaint averment is that, the loan was given by the plaintiff as a hand loan to the defendants on 11.12.2001. The plaintiff has also stated that defendant No.1 is a Firm and defendants No.2 to 21 are its partners, as such, he has arrayed them as parties. He has also stated that the defendants though had agreed to repay the loan together with interest at the rate of 2% per month thereupon, but they failed to repay the loan amount together with interest thereupon, which made him to cause a legal notice dated 11.09.2006. In that regard, he has produced the cheque dated 24.02.2005 at Ex.P.2; copy of the legal notice at Ex.P.3; and postal acknowledgement marked at Ex.P.4.
15. Interestingly, it is only defendant No.1 - Firm and defendant No.17, who received the summons and contested the matter. Even among these two, it is only defendant No.17, who has filed his written statement. Though, the learned counsel for the appellants’ in his argument vehemently submitted that the written statement in its title would go to show that the same is filed by defendant No.1, but, admittedly, even according to him almost every praragraph in the said written statement mentions that, it is defendant No.17, who is made the averment in the written statement. Moreover, the verification at the end of the written statement also clearly go to show that one Sri. C.K.Vijendren, Power of Attorney holder of 17th defendant has verified the written statement. He, in fact has subscribed his signature as 17th defendant’s General Power of Attorney Holder only. Even the said written statement is also signed by the counsel as an advocate for 17th defendant only, but not as an advocate for any other defendants.
16. A perusal of the order sheet of the trial Court of the date 04.08.2009 also go to show that the trial Court has recorded that the written statement was filed by defendant No.17 only. Therefore, merely because at one place in the written statement, in the title there is a mentioning that first defendant has filed the written statement, by that, it cannot be accepted that the said written statement is of first defendant.
F r o m t h e a b o v e findings, it is clear that the mentioning of the written statement as of first defendant, is a typographical error, otherwise the written statement would not have been signed by 17th defendant through his General Power of Attorney Holder and also by the learned counsel for 17th defendant Further the said written statement only would not have verified by 17th defendant alone. Further, it is nobody’s case that the first defendant or any of the defendants have adopted the written statement filed by 17th defendant, as such, the trial Court also has received the said written statement as that of 17th defendant alone. Thus, it is clear that defendant No.1 has not filed its written statement. Therefore, when the plaint averment is that, defendant No.1 as a Firm had availed loan from the plaintiff on 11.12.2001 for a sum of `.1,00,000/- and it had issued a cheque at the same time,which is at Ex.P.2 the said contention has not been denied by defendant No.1,which has not filed its written statement. Therefore, primarily, defendant No.1 should have filed its written statement, if really it was intended to contest the matter, but it has failed to file its written statement for the reasons best known to it.
17. Apart from the above, a reading of the evidence of P.W.1 and D.W.1 would go to show that P.W.1 has specifically stated that the defendants had availed a loan of `.1,00,000/- from the plaintiff on 11.12.2001 agreeing to repay the same with interest thereupon at the rate of 2% per month, at the same time after availing the loan, the defendant No.1 also issued a cheque for `.1,00,000/-, which the witness has marked at Ex.P.2. The said statement of P.W.1 is nothing but a reiteration of the plaint averment. Interestingly, the only defendant No.17, who has filed his written statement and examined his General Power of Attorney Holder as D.W.1, neither in his written statement nor in the evidence of the parties, anywhere denied about the issuance of the cheque at Ex.P.2, at the same time, when the alleged loan was said to have taken by defendant No.1. Therefore, the pleading and evidence of P.W.1 that the cheque at Ex.P.2 was issued by the defendants, at the same time, when they availed the loan, stands established.
Further the defendants for the first time, in the cross-examination of P.W.1 has come up with a defence suggesting to the witness that the cheque at Ex.P.2 was stolen by defendant No.22 and thereafter he has delivered the said cheque to the plaintiff. P.W.1 has denied the said suggestion. The defendant, who had taken such a plea in the cross-examination of P.W.1 had never taken such a stand in his written statement. As such, for the first time, the defendants have come up with the defence in the cross-examination of P.W.1 that the cheque at Ex.P.2 was stolen by defendant No.22. Even otherwise, the defendants have except making such a suggestion to P.W.1 in his cross-examination and making such a submission in his examination -in-chief as D.W.1 have neither come up with any corroborative evidence nor produced any documents in support of DW1’s evidence. Had it really been that defendant No.22 had stolen the said cheque from defendant No.1 - Firm, nothing had prevented for defendant No.1 Firm to take up appropriate legal action against defendant No.22 including the institution of a criminal case against him for the alleged theft of a negotiable instrument. The inaction on the part of defendant No.1 - firm with large number of partners, which has kept quite till the date from not taking any action against defendant No.22, even after alleging that he had stolen the cheque at Ex.P.2, would itself create a serious doubt in the stand taken up by the defendant No.1 to over come the plaint averments made against it.
On the other hand, a suggestion was made to P.W.1 in his cross-examination suggesting that when the cheque was given, it was a blank cheque. Though P.W.1 has not admitted the said suggestion as true, but by suggesting to the witness that the said cheque was given to the defendant, has shown that the said cheque was given by it and it had the knowledge of giving of the said cheque to the plaintiff. As such also, the plaintiff is to be held established that the defendant had issued a cheque for a sum of `.1,00,000/- as per Ex.P.2, at the same time, when the defendant No.1 - Firm had availed a loan of Rs.1,00,000/- from him on 11.12.2001.
Even though the plaintiff has not produced any documents to show the passing of consideration of `.1,00,000/- as a hand loan given by him to the defendant, but since the plaintiff could able to establish the delivery of the cheque to him by defendant No.1 and the circumstances under which the said cheque is said to have been issued to him, then the presumption under Section 118(a) of the Negotiable Instrument Act comes into operation in favour of the plaintiff. Since the defendants have failed to rebut the said presumption, it stands established that the plaintiff has proved that defendant No.1 - Firm and defendant No.17 had availed a loan of `.1,00,000/- from him on 11.12.2001.
18. The plaintiff claims to have issued a legal notice before institution of the suit upon the defendants as per Ex.P.3 and Ex.P.4 is the postal acknowledgement which shows that defendant No.1, has acknowledged the receipt of the said notice. Even in the cross- examination of P.W.1 also, the defendants have not denied the issuance of the said notice by the plaintiff. In the very said notice, the plaintiff has clearly and categorically stated that the defendants had availed a hand loan of a sum of `.1,00,000/- from him on 11.12.2001 agreeing to repay the same together with interest thereupon at the rate of 2% per month. however, they have failed to repay the loan amount and the interest thereupon. Admittedly, the defendants have not responded to the said legal notice by sending a reply to it. Further more, it is not at all the case of the defendants that they have paid any amount to the plaintiff, either towards the principal loan amount or towards the interest. No doubt, they had taken a contention that no such loan was ever availed by them. However, in view of the observation made above that, the plaintiff has established the loan transaction as averred in the plaint, the fact remains that the entire loan amount of `.1,00,000/- remains unpaid by the defendants to the plaintiff. As such, the plaintiff has also established that the defendants are due to him a sum of `1,00,000/- towards the loan amount together with interest thereupon.
19. The other point of the argument of the learned counsel for the appellants’ was that the suit was barred by time. The said contention was taken up by defendant No.17 in his written statement and the trial Court has framed an issue on that point at issue No.4. It answered the said issued No.4 in the negative holding that the suit is within time. The trial Court has not clearly and specifically attributed any reasons for holding that the suit is barred by time.
The argument of the learned counsel for the appellants’ is that when the loan is alleged to have given on 11.12.2001 and admittedly, even the cheque is dated 20.04.2005, the same is beyond the period of limitation. As such, institution of the suit though is within the period of three years from the date of the cheque, still the suit is barred by limitation.
I do not consider that the said argument deserves to be accepted for the reason that it is the plaint averment as well the evidence of P.W.1 that the said cheque (Ex.P.2) was delivered to the plaintiff by the defendants, at the same time when they availed the loan from him. The said pleading and the evidence of P.W.1 has not been denied either in the written statement or in the cross-examination of PW1. Therefore, the fact remains that when the defendants’ availed loan from the plaintiff, it was at the same time the cheque at Ex.P.2 was also delivered to him, which means a postdated cheque was given to the plaintiff at the time of availing the loan. Since the date of the cheque was a future date i.e., 20.04.2005, the plaintiff has naturally awaited till the expiry of the said date and only when the defendants have failed to repay the loan amount, he had instituted the suit within the period of limitation. Further, it is not a payment of a time barred debt. Thus, assuming for a moment that the cheque was issued on 20.04.2005, still there is no prohibition for payment of the debt barred by time. As such, when the defendants themselves have chosen to issue the cheque (according to them) with respect to the alleged time barred debt, still the suit filed cannot be held as barred by limitation.
20. The last argument of the learned counsel for the appellants’ is with respect to the alleged collusion between the plaintiff, defendant No.22 and P.W.1. In that regard, even though P.W.1 has admitted that plaintiff is the nephew and defendant No.22 is the elder brother of the plaintiff, but by a mere relationship between the parties, the alleged collusion cannot be inferred. In order to draw any inference with respect to the collusion between the parties, there must be clear evidence or materials or atleast the circumstances which strongly lead to an inference of collusion between the parties. In the instant case, except the fact of admitted relationship between the parties, there is no other evidence either oral or documentary to show that there was collusion between them. Even though the award passed by the Labour Court, which is at Ex.D.2 would go to show that the dispute raised by defendant No.22 against defendant No.1 through its partner came to be rejected and the same was further confirmed by this Court in W.P.No.16163/2011 as per Ex.D.3, by that itself, it cannot be inferred as either that defendant No.22 had stolen the cheque from defendant No.1 - Firm or that there was collusion between the plaintiff, defendant No.22 and P.W.1. It is for the said reason, the argument of the learned counsel for the appellants’ on the said point is also not acceptable.
Thus, it is established that the plaintiff has been able to prove that defendant No.1 and 17 had availed a loan of Rs.1,00,000/- from him on 11.12.2001 agreeing to repay the same with interest thereupon and that the defendants have failed to repay the said amount either in full or part. As such, the entire loan amount stands outstanding as on the date of institution of the suit.
21. The trial Court has arrived at the same finding that, the plaintiff is entitled for a decree. It has also awarded interest at the rate of 24% per annum as prayed for by the plaintiff. While awarding such a rate of interest, it has observed that the loan was taken by the business concern, as such the agreed rate of interest deserves to be awarded.
A careful scrutiny of the pleadings of the parties as well the evidence led, go to show that the defendants apart from denying the alleged loan, have also denied specifically the alleged rate of interest, which they alleged to have been agreed or accepted. No doubt, the plaintiff could able to show by his oral as well the documentary evidence (Ex.P.2) that, the defendants had availed a loan of `1,00,000/- from him, which has been still remained due from them. However, except his self- serving testimony, he has not produced any material to corroborate his statement that the defendants had agreed to repay the said loan amount together with interest at the rate of 2% per month. Further the plaintiff, nowhere has stated that he has been a money lender or that a business man and the said amount would have been a part of his business, had it not been lend to the defendants? In such peculiar circumstances of this case, I am of the view that the trial Court ought not to have awarded interest at the rate of 24% per annum and should have confined the interest at the rate of 6% per annum under Section 34 of the Code of Civil Procedure. As such, it is only to the extent of reducing the rate of interest, the impugned judgment and decree deserves interference by this Court. Accordingly, I proceed to pass the following:
ORDER The appeal is allowed in part. The judgment and decree dated 20.01.2015 passed by the XXX Addl. City Civil Judge, Bengaluru City, in O.S.No.9202/2006 is modified only to the extent that the rate of interest awarded by the trial Court at 24% per annum from the date of the suit till realisation of the amount is modified and fixed at `6% per annum from the date of the suit till realisation. Rest of the terms of the judgment and decree remains unaltered.
Draw modified decree accordingly.
Registry to transmit a copy of this judgment along with lower Court records to the trial Court without delay.
Sd/- JUDGE Psg*