IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF AUGUST, 2019 BEFORE THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY R.F.A.No.615 OF 2012 BETWEEN:
Sri. R.Chandrashekar S/o. Late Sri. Ramanna, 58 years, R/at No.24, Type III, Block 4, Byrasandra Campus, NIMHANS, Bangalore-560 029.
(By Sri. G.B.Nandeesh Gowda, for Sri. R.B.Sadasivappa, Advocate) AND:
Sri. R.Chandrashekar S/o. Sri. G.Rajaram, 38 years, R/at No.21/4, Lakshmi Road, Shanthinagar, Bangalore-560 027.
…Appellant …Respondent (By Sri.N.Devaraj & Sri.M.N.Nagesh, Advocates) **** This Regular First Appeal is filed under Section 96 of the Code of Civil Procedure, 1908, against the judgment and decree dated:12-12-2011 passed in O.S.No.3280/ 2002 on the file of the XXX Additional City Civil Judge, Bangalore City, decreeing the suit for recovery of money.
This Regular First Appeal coming on for Hearing this day, the Court delivered the following:
J U D G M E N T This is a defendant’s appeal. The original suit filed by the present respondent against the present appellant in the Court of the learned XXX Additional City Civil Judge, Bangalore City (hereinafter for brevity referred to as the “Trial Court”) in O.S.No.3280/2002 for recovery of a total sum of `34,000/- with interest thereupon came to be decreed by the Trial Court by its judgment and decree dated 12-12-2011. It is against the said judgment and decree, the defendant in the Trial Court has preferred this appeal.
2. The summary of the case of the plaintiff in the Trial Court was that, the defendant was the colleague of plaintiff’s father who had approached the plaintiff through his father for financial assistance. Considering the same, the plaintiff gave a hand loan of a sum of `34,000/- on 11-07-1999 to the defendant in which regard, the defendant had executed an On- Demand Promissory Note in favour of the plaintiff. The defendant had agreed to repay the said loan within three months from the date of the loan. Since the defendant did not repay the loan amount despite the demand made by the plaintiff, a legal notice dated 17-10-2001 was sent to the defendant on behalf of the plaintiff demanding the repayment of the loan. Since the defendant did not meet the demand made therein, the plaintiff was constrained to institute the suit for recovery of the loan amount of a sum of `34,000/- with interest thereupon.
3. In response to the suit summons, the defendant appeared through his counsel and filed his Written Statement. The defendant admitted that the father of the plaintiff was his colleague and that both of them were working in NIMHANS. However, the defendant stated that he had no acquaintance with the plaintiff, as such, question of he seeking any financial assistance from the plaintiff would not arise. He specifically denied that he had availed hand loan of a sum of `34,000/- from the plaintiff and had executed an On-Demand Promissory Note in that regard. He has stated that he received the legal notice, but stated that the suit instituted by the plaintiff is a false claim, as such, deserves to be dismissed.
Further, the defendant has put forth his case contending that, the plaintiff’s father was running a chit business wherein a sum of `1,000/- had to be paid every month and the chit holders were all employees of NIMHANS. The defendant also had subscribed for two chits each for a sum of `30,000/-. He had taken one of the chits, where he got a sum of `12,000/- by leaving a discount of `18,000/- on 30-06-1994. Subsequently, after three months, the second chit was also taken by him and that he had cleared his liability under both the chits. However, at the time of the defendant opting to raise the chit amount, the plaintiff’s father had taken duly signed but a blank On-Demand Promissory Note from him as a security. Undue advantage of the said Promissory Note has been taken by the plaintiff by instituting the suit. The defendant also contended that the suit was barred by limitation.
4. Based on the pleadings of the parties, the Trial Court framed the following issues for its consideration:-
“1] Whether the plaintiff proves, on 11-7-1999 the defendant having borrowed hand loan of `34,000/- from the plaintiff executed demand Promissory Note as contended?
2] Whether the plaintiff further proves the defendant has agreed to pay the said sum within 3 months from the date of borrowal as contended?
3] Whether the defendant proves, the father of the plaintiff had collected signed blank pro-Note of the defendant as a security towards chit transaction as alleged.?
4] Whether the plaintiff is entitled to suit claim as prayed for?
5] What order or decree?”
In support of his contention, the plaintiff got his father Sri.B.G. Rajaram examined as a Power of Attorney and as PW-1 and got marked documents from Exhibits P-1 to P-4(a). The defendant got himself examined as DW-1 and got one Sri.K.N. Vishwanatha examined as DW-2 and got marked Exs.D-1 to D-4.
5. After hearing both side, the Trial Court by its impugned judgment and decree dated 12-12-2011, answered issues No.1, 2 and 4 in the ‘affirmative’ and issue No.3 in the ‘negative’ and decreed the suit of the plaintiff, holding him entitled to recover a sum of `34,000/- from the defendant along with interest at the rate of `12% per annum from the date of suit till 19-04-2003 and from 06-03-2009 till realisation. It is against the said judgment and decree, the defendant has preferred this appeal.
6. The Lower Court records were called for and the same are placed before this Court.
7. Heard the arguments of the learned counsel for appellant/defendant.
8. In spite of granting sufficient opportunity, the learned counsel for the respondent/plaintiff had remained absent, as such, no argument was addressed from the respondent’s side.
9. Perused the material placed before this Court including the memorandum of appeal and the impugned judgment.
10. For the sake of convenience, the parties would be henceforth referred to with the ranks they were holding before the Trial Court respectively.
11. In the light of the materials placed before this Court, the following points arise for my consideration in this appeal:-
[i] Whether the plaintiff has proved that the defendant had availed a loan from him of a sum of `34,000/- on 11-07-1999 agreeing to repay the same with interest?
[ii] Whether the judgment and decree under appeal deserves any interference at the hands of this Court ?
PW-1 –Sri.B.G. Rajaram claiming himself to be a Special Power of Attorney holder of the plaintiff, has, in his Examination-in-chief, in the form of Affidavit evidence, reiterated the contentions taken up by the plaintiff in his plaint. He has stated that the defendant was his colleague who approached the plaintiff through him seeking financial assistance to overcome his urgent family necessities. Considering the request of the defendant, the plaintiff gave him a loan of a sum of `34,000/- as hand loan on 11-07-1999. In that regard, after receipt of the said loan amount, the plaintiff executed an On-Demand Promissory Note for the said sum in favour of the plaintiff. Though the defendant had promised to repay the loan amount within three months, he did not keep up his promise, which made the plaintiff to issue a legal notice on 17-10-2001 through his counsel calling upon the defendant to repay the loan amount availed by him.
Despite service of legal notice upon him, the defendant neither repaid the loan amount nor replied to the notice which constrained the plaintiff to institute the suit against the defendant.
12. In his support, PW-1 (father of plaintiff) produced the Special Power of Attorney said to have been executed by the plaintiff and marked it as Ex.P-1; an On-demand Promissory Note at Ex.P-2; consideration receipt at Ex.P-3; a copy of legal notice said to have been issued on behalf of the plaintiff to the defendant and dated 17-10-2001 at Ex.P-4; and a postal receipt at Ex.P-4(a).
13. In his cross examination, PW-1 has given some more details as to when and how the request was made by the defendant for availing the loan and when the Promissory Note was written and executed. He reiterated that he was present when the On- Demand Promissory Note was executed by the defendant in favour of the plaintiff. He has also stated that two witnesses also subscribed their signatures to the said Promissory Note. He denied the suggestion made to him that he was running a chit and the defendant was a subscriber in it for two chits. He also denied a suggestion that the defendant had availed the benefit of two chits and in that regard as a security he had collected a blank On-demand Promissory Note from the defendant. The witness also denied a suggestion that the defendant had cleared the liability under the alleged chits said to have been raised by him. A copy of Show Cause notice was confronted to this witness suggesting that the witness had lodged a complaint against the defendant alleging non repayment of the loan amount in which regard, the said show cause notice was issued to the plaintiff and that the said complaint also came to be closed. The said show cause notice was marked at Ex.D-1.
14. The defendant as DW-1 in his Examination- in- chief in the form of Affidavit evidence has reiterated the contentions taken up by him in his Written Statement. Though he has not denied the signing of the On-Demand Promissory Note which the plaintiff has got produced and marked at Ex.P-2, he specifically contended that it was given as a security to the plaintiff in connection with the chit business. He specifically stated that he had never availed any loan from the plaintiff, much less a sum of `34,000/-.
In order to support his contention that the father of the plaintiff by name Sri.B.G. Rajaram who is PW-1 was running a chit business in his place of employment, i.e. at NIMHANS, the defendant got examined one Sri.K.N. Vishwanatha as DW2 who in his Examination-in-chief in the form of Affidavit has stated that he is also an employee at NIMHANS. He has stated that the defendant had subscribed for two chits and cleared his liability under both the chits. He stated that the defendant had not taken any loan from the plaintiff.
The witness also stated that the defendant had lodged a complaint with NIMHANS authority about the PW-1 running a chit business, but no action was taken against PW-1 – Sri.B.G. Rajaram in that regard. In his support, the defendant got produced a copy of the show cause notice and marked it as Ex.D-1; his identity card and salary slip at Exs.D-2 and D-3 respectively and contending that he had raised the amount under the chit for the activities of a Temple at his place, he got produced a pamphlet of a temple and marked as Ex.D-4. DW-1 adhered to his original version even in his cross-examination also. He denied all the suggestions made from the plaintiff’s side put forth the plaintiff’s case, in the mouth of the witness.
15. In the light of the above, it was the first point of argument of the learned counsel for the defendant/appellant that PW-1 is only a Special Power of Attorney holder and admittedly he is not the original vendor. As such he cannot have any personal knowledge about the transaction. Thus, he is not competent to lead his evidence as a Power of Attorney holder in this case on behalf of the plaintiff.
16. In that regard, learned counsel also relied upon a judgment of the Hon’ble Apex Court in the case of Man Kaur (Dead) by LRs. Vs. Hartar Singh Sangha reported in (2010) 10 Supreme Court Cases 512, wherein at para-18, the Hon’ble Apex Court has summarised the position as to, who should give evidence in the matters of personal knowledge. The same is reproduced herein below:
“18. We may now summarise for convenience, the position as to who should give evidence in regard to matters involving personal knowledge:
(a) An attorney holder who has signed the plaint and instituted the suit, but has no personal knowledge of the transaction can only give formal evidence about the validity of the power of attorney and the filing of the suit.
(b) If the attorney holder has done any act or handled any transactions, in pursuance of the power of attorney granted by the principal, he may be examined as a witness to prove those acts or transactions. If the attorney holder alone has personal knowledge of such acts and transactions and not the principal, the attorney holder shall be examined, if those acts and transactions have to be proved.
(c) The attorney holder cannot depose or give evidence in place of his principal for the acts done by the principal or transactions or dealings of the principal, of which principal alone has personal knowledge.
(d) Where the principal at no point of time had personally handled or dealt with or participated in the transaction and has no personal knowledge of the transaction, and where the entire transaction has been handled by an attorney holder, necessarily the attorney holder alone can give evidence in regard to the transaction. This frequently happens in case of principals carrying on business through authorized managers/attorney holders or persons residing abroad managing their affairs through their attorney holders.
(e) Where the entire transaction has been conducted through a particular attorney holder, the principal has to examine that attorney holder to prove the transaction, and not a different or subsequent attorney holder.
(f) Where different attorney holders had dealt with the matter at different stages of the transaction, if evidence has to be led as to what transpired at those different stages, all the attorney holders will have to be examined.
(g) Where the law requires or contemplated the plaintiff or other party to a proceeding, to establish or prove something with reference to his `state of mind' or `conduct', normally the person concerned alone has to give evidence and not an attorney holder. A landlord who seeks eviction of his tenant, on the ground of his `bona fide' need and a purchaser seeking specific performance who has to show his `readiness and willingness' fall under this category. There is however a recognised exception to this requirement. Where all the affairs of a party are completely managed, transacted and looked after by an attorney (who may happen to be a close family member), it may be possible to accept the evidence of such attorney even with reference to bona fides or `readiness and willingness'. Examples of such attorney holders are a husband/wife exclusively managing the affairs of his/her spouse, a son/daughter exclusively managing the affairs of an old and infirm parent, a father/mother exclusively managing the affairs of a son/daughter living abroad.”
A reading of the above observation made by the Hon’ble Apex Court makes it clear that, an Attorney who has signed the plaint and instituted the suit but has no personal knowledge of the transaction can only give a formal evidence about the validity of the Power of Attorney and the filing of the suit. If the Power of Attorney has handled any transaction in pursuance of the Power of Attorney granted to him by the principal, he may be examined as a witness to prove those acts or transactions. However, the said Attorney holder cannot depose or give evidence in place of his principal for the acts done by the principal or transactions or dealings of the principal of which principal alone has the personal knowledge.
However, the very same Hon’ble Apex Court has further observed in the same finding that, where the principal at no point of time had personally handled or dealt with or participated in the transactions and had no personal knowledge of the transaction and where the entire transaction has been handled by an Attorney holder, then, necessarily, the Attorney holder alone can give evidence in regard to the said transaction.
The Hon’ble Apex Court has further observed that where the entire transaction has been conducted through a particular Attorney holder, then, the principal has to examine that Attorney holder only to prove the transaction and not a different or subsequent Attorney holder. From this, it is very clear that the Power of Attorney holder is not totally debarred from giving evidence on behalf of the principal. He cannot give the evidence with respect to those facts or the transactions which are exclusively to the knowledge of the principal. However, where the transaction is also to the knowledge of the Power of Attorney, or exclusively to the knowledge of the Power of Attorney, then, the said Power of Attorney cannot be called as disabled or not entitled to give his evidence in the case.
17. In the instant case, PW-1 who is the Power of Attorney is admittedly the father of the plaintiff. At the very first instance, the plaintiff in his plaint itself in para-2 has stated that the defendant approached him through his father seeking financial assistance. Thus, the very plaint averments mention that the approach of the defendant for hand loan was through PW-1 only. The same is reiterated by PW-1 even in his Examination-in-chief wherein he has stated that the defendant being his colleague approached the plaintiff through him seeking financial assistance to over come his urgent family necessities. Thus, the approaching of the plaintiff for the loan was not directly by the defendant to the plaintiff but it was through PW-1.
Further, PW-1 in his evidence has specifically stated that he was present when the loan transaction took place. The said witness in his cross-examination while giving more details about the loan transaction has stated that in September-1999, for about two to three times, the defendant had approached him requesting for a loan. Since he did not have sufficient funds, he got the said loan given to him through his son. The witness has stated that he had got the said loan given to the defendant through his son. By stating so, he has made it clear that the loan was given by the plaintiff to the defendant through him.
Further, the very same PW-1 has also stated that, when the Promissory Note was executed by the defendant, he was present. By stating so, the witness has once again reiterated his presence at the time of loan transaction. PW-1 continued by saying that the said amount was given in the house of the defendant by him and the loan was given by him towards hand loan. By stating so, PW-1 has further made it clear that handing over of the cash amount in the hands of the defendant was also through him.
Thus, PW-1 as a Power of Attorney holder of the plaintiff has at more than one place commencing from the plaint averments till his cross-examination as PW-1 has made it clear that, he had full personal knowledge of the entire loan transaction and the loan transaction is routed through him and he was present during the course of the transaction. As such, since it is established that PW-1 has the personal knowledge about the suit transaction, then, merely because he is a Special Power of Attorney holder of the plaintiff, he cannot be debarred from giving evidence on behalf of the plaintiff or his evidence cannot be discarded or disbelieved. As such, the first point of argument of the learned counsel for the defendant/appellant is not acceptable.
18. Learned counsel for the defendant/ appellant has further raised a doubt regarding the loan transaction. He submitted that there is discrepancy in the date of the alleged loan as shown in the evidence and as shown in the legal notice at Ex.P-4. He also stated that when PW-1 has categorically stated that there is no meeting of the defendant and his son i.e. plaintiff, the very loan transaction is highly suspicious and cannot be believed.
19. The Promissory Note which is at Ex.P-2 as well the consideration receipt at Ex.P-3 are dated 11-07-1999. The plaint averment is also that the plaintiff gave a hand loan of a sum of `34,000/- on 11-07-1999. PW-1 in his Examination-in-chief has stated that, the loan was given to the defendant on 11-07-1999. He has stated in his cross-examination that, in September-1999, the defendant had approached him two to three times requesting for a hand loan. It was he who got the said loan given to him through his son. Thus, he made it clear that the loan transaction was in September-1999. No doubt, the legal notice, copy of which is at Ex.P-4 though bears the year of date as “1999”, the original typed date appears to be “2001”. After striking “2001”, it appears to have been written as “1999”. Considering this, the appellant contends that the legal notice has given a wrong date of the Promissory Note. Merely because there is an alteration in the year of the Promissory Note in the legal notice, by that itself, it cannot be concluded that there was no such loan transaction, much less on 11-07-1999. It is also for the reason that the copy of the legal notice which is at Ex.P-4 mentions the year of On-Demand Promissory Note as “1999”, but, it is after cancelling the earlier typed portion of the year “2001”, which is shown on the On-Demand Promissory Note. By that itself it cannot be concluded that, the year of the On-Demand Promissory Note in the legal notice is “2001” only. At the same time, it cannot be ignored that the said year portion in the said legal notice has been duly corrected by incorporating the correct year of the loan transaction as “1999”.
Further, PW-1 in his cross-examination has also stated that the said wrong mentioning of the year in the legal notice was purely due to a typographical error. Thus, when the said typographical error has been duly corrected and then after showing the correct date of the loan availment, the same is clarified then it would rule out the possible suspicion which was attempted to be imbibed in the case of the plaintiff. As such, the argument of the learned counsel for the defendant/ appellant on the said point is not acceptable.
20. According to the plaintiff, the loan that was given to the defendant was by the plaintiff, however, through his father i.e. PW-1. No doubt, PW-1 in his cross-examination, at one place has stated that, the defendant and plaintiff have never met each other. Learned counsel for the defendant/appellant submits that when they have not met each other, there is no chance of the plaintiff lending any amount to the defendant. The said argument of the learned counsel for the defendant/appellant also is not acceptable for the reason that, even accepting that the defendant had not met the plaintiff, but it is nobody’s case that when the loan was given to the defendant, the plaintiff was physically present. As already observed above, it is the case of the plaintiff that the defendant approached him though his father. It is also the evidence of PW-1 that it was through him, the defendant got loan from the plaintiff. Furthermore, PW-1 himself has stated that he gave the cash amount to the defendant in his house. Therefore, when the approach to the loaner i.e. the plaintiff by the defendant i.e. loanee was through PW-1 and when it was PW-1 who handed over the said cash amount on behalf of the plaintiff to the defendant in the house of the defendant, the non-meeting of the plaintiff and the defendant in person would not imbibe any doubt in the suit transaction. As such, the said argument of the learned counsel for the defendant/appellant is also not acceptable.
21. The defence of the defendant/appellant in the Court below, as observed above, was that, he was a subscriber of two chits said to have been run by PW-1 at NIMHANS and in that connection, when defendant had availed the benefit of two chits, a blank, but duly signed On-Demand Promissory Note was collected by PW-1 which was subsequently misused by him. The said contention of the defendant was put to PW-1 in the form of suggestions in his cross-examination, however, PW-1 has totally denied all those suggestions.
22. In order to prove his contention, the defendant got examined one Sri. K.N. Vishwanatha as DW-2. As already observed above, the said DW-2, though has stated that, PW-1 was carrying on chit activity at NIMHANS, but admittedly, DW-2 was not a subscriber nor a member in the said chit activity. Nowhere the witness has stated that how come he got the knowledge about PW-1 alleged to have been running a chit business or activity at NIMHANS. Merely because a co-employee of an establishment comes and deposes something which is beyond the general work of the employees in the Institution, by that itself, it cannot be believed that his evidence is ‘true’, unless the evidence proves to be trustworthy. Interestingly, nowhere the defendant had taken any such contention in his Written Statement also that, many employees of the NIMHANS had the knowledge of PW-1 running a chit business in the Establishment including DW-2. As such, for the first time, the defendant introduced DW-2 as his witness, however, the said witness could not able to say in what manner and how PW-1 was running the chit business.
23. That apart, an interesting omission in the evidence of DW-2 can be noticed and the said omission is, nowhere the witness has stated as to when and under what circumstance the On-demand Promissory Note at Ex.P-2 was executed by the defendant. Had really DW-2 been aware of the chit business and the defendant being a subscriber to two chits there under, and also raising two chits by a giving a discount, then, DW-2 should also have the knowledge of the defendant executing a blank but duly signed On-Demand Promissory Note in favour of the plaintiff. Because, the said raising of the amounts under two chits about which DW-2 claims to have the knowledge goes along with the alleged contention of the defendant that it was on that occasion, he had given a blank signed On-Demand Promissory Note to plaintiff. Therefore, DW-2 nowhere whispering about it further makes the doubt stronger to suspect his version. As such, the evidence of DW-2 is not worth to believe. The consequence is that, the defendant though had taken a contention that it was in connection with the chit transactions, he had executed an On-Demand Promissory Note and delivered it to the plaintiff, but, he had confined the same to his plea without corroborative and trust worthy evidence to establish the same. On the other hand, the plaintiff has successfully able to establish that the defendant had availed a hand loan of a sum of `34,000/- from him on 11-07-1999 and has failed to repay the said loan amount. As such, the finding of the Trial Court to that extent does not warrant any interference at the hands of this Court.
24. Coming to the aspect of ‘interest’ and the ‘rate of interest’ awarded by the Trial Court, it can be noticed that the Trial Court has decreed the suit together with interest at the rate of `12% per annum from the date of suit till 19-04-2003 and from 06-03-2009 till realisation.
25. A careful reading of the plaint goes to show that, nowhere the plaintiff has averred that a particular percentage of interest was agreed to be payable by the defendant to the plaintiff at the time of repayment of the loan amount. In the entire pleading the plaintiff has only stated and repeated about the defendant availing a loan of a sum of `34,000/- from him, but nowhere whispered as to whether any rate of interest was agreed to be paid by the defendant and if so, at what rate. It is only in the prayer column, the plaintiff has prayed for interest at the rate of ‘21’.
Even there also, he has not made it clear whether the said ‘21’ is the rate of interest in percentage or in what manner. Thus, the plaint is vague in so far as the claim of any interest is concerned.
26. A careful examination of the On-Demand Promissory Note at Ex.P2 also goes to show that the said Promissory Note nowhere mentions about the percentage of the rate of interest agreed to between the parties. The On-Demand Promissory Note which is in a printed formatised manner, where the blanks have been filled up, has left the rate of interest portion in blank without filling it. As such, the alleged rate of interest that is being claimed by the plaintiff from the defendant at the rate of `21% is for the first time appeared in the evidence of PW-1 in his Examination- in-chief. Since the plaint averment regarding the agreement towards the rate of interest so also the On-
Demand Promissory Note at Ex.P-2 are silent about the same, the introduction of the said rate of interest at `21% for the first time in the evidence, cannot be believed. However, a person who has enjoyed the benefit of the loan for quite a long time and when the said loan is shown to have been lent to him with a condition to repay the same, which according to PW-1 is together with interest there upon, cannot be considered a loan given or granted without any interest. Even otherwise, exercising power under Section 34 of the Code of Civil Procedure, 1908, a reasonable interest can be awarded in the facts and circumstances of the case.
27. However, the Trial Court without considering all these aspects and accepting the contention of the plaintiff that the defendant had agreed to pay the interest at the rate of `21% per annum had reduced it to `12% per annum and awarded the rate of interest at such rate. Since the said reasoning of the Trial Court is not convincing, even otherwise, in the absence of any specific agreement towards the rate of interest, I am of the view that payment of interest even at `12% per annum would be on the higher side and the rate of interest can be confined to `6% per annum on the principal amount. It is only to such extent, the judgment and decree passed by the Trial Court requires interference.
Accordingly, I proceed to pass the following:-
O R D E R [i] The appeal is allowed in part;
[ii] The judgment and decree dated 12-12-2011 passed in O.S.No.3280/2002 on the file of the XXX Additional City Civil Judge, Bangalore City, is hereby modified only with respect to the percentage of rate of interest awarded by the Trial Court which is at `12% per annum and the same is modified at `6% per annum.
[iii] Barring the above, rest of the judgment and decree under appeal including the liability of the defendant to pay the decreetal amount to the plaintiff stands confirmed;
[iv] Draw the modified decree accordingly.
Registry to transmit a copy of this judgment along with the Lower Court records to the concerned Trial Court, without delay.
BMV* Sd/- JUDGE