Telangana High Court
M.Manikyam Died Per Lrs vs Gic Housing Finance Ltd on 27 December, 2023
Author: G. Radha Rani
Bench: G. Radha Rani
THE HON'BLE Dr. JUSTICE G. RADHA RANI
SECOND APPEAL No.189 of 2017
JUDGMENT:
This Second Appeal is filed by the appellants-defendants 3 to 5 aggrieved by the judgment and decree dated 06.04.2015 passed in A.S.No.271 of 2010 on the file of the III Additional Chief Judge, City Civil Court, Hyderabad, confirming the judgment and decree dated 07.06.2010 passed in O.S.No.26 of 2006 on the file of the V Senior Civil Judge, City Civil Court, Hyderabad.
2. The parties are hereinafter referred to as arrayed before the trial court.
3. The respondent No.1-plaintiff filed a suit for recovery of money of Rs.4,08,356/- from defendants 1 to 3 jointly and severally with interest @ 24% per annum together with costs. The plaintiff was a non-banking financial institution doing finance business. The defendant No.1 approached the plaintiff for a housing loan and submitted a loan application on 25.04.2003 for sanction of loan of Rs.3,00,000/- for purchase of first floor portion with a plinth area of 900 Sq. Ft. including common areas together with undivided share of land admeasuring 30 Sq. Yds. out of 140 Sq. Yds. in premises bearing H.No.1-7-40/1 in Plot No.20, Sy.Nos.28 and 29, Street No.8, Habsiguda. The defendant No.1 was working as Dr.GRR,J sa_189_2017 2 Junior Engineer II in Electrical Department CEE/P/SC/S.C. Railway and he filed copies of his salary pay slips, identity card in proof of his employment. He also filed a photocopy of the sale deed of his proposed vendor along with link documents along with sanction plan issued by the Commissioner, Uppal Kalan Municipality for construction of first and second floors in H.No.1-7-40/1 in the name of Sri K. Manikuam. The defendant No.1 also submitted copies of his salary certificate, Form 16 from the Department and pay slips in proof of his income for satisfaction of the officials of the plaintiff for sanction of the loan. The plaintiff obtained legal opinion from panel of advocates and technical value report from the Engineer and sanctioned housing loan of Rs.3,00,000/- to the defendant No.1 on 28.04.2003 for purchase of house property and released Rs.2,50,000/- through a cheque bearing No.166374 dated 19.05.2003 in the name of defendant No.3. The defendant No.1 received a cheque from the plaintiff on 19.05.2003, signed the receipt and he deposited the original sale deed dated 26.04.2003. The defendant No.1 through authorization letter dated 07.05.2003 requested the plaintiff to issue a cheque in the name of defendant No.3 either to him or to Mr. Shiva Prasad. The plaintiff contended that Shiva Prasad collected the balance amount of Rs.50,000/- through cheque dated 27.05.2003. The defendant No.1 executed a house loan agreement in favour of the plaintiff and also signed on necessary documents undertaking to repay the said loan of Rs.3,00,000/- along with interest @ 9.75% Dr.GRR,J sa_189_2017 3 per annum floating rate of interest and also signed on the promissory note and the note of authority. The defendant No.2 stood as guarantor and signed on necessary documents agreeing to repay the loan amount, if the first defendant fails to repay the same. The defendant No.1 agreed to repay the said loan with interest @ 9.74% per annum by way of 179 total monthly instalments @ Rs.3,179/- and also signed on necessary documents. Thus the defendant No.1 agreed to discharge the entire loan by way of monthly instalments and also submitted cheques to the plaintiff towards payment of monthly instalments and the said cheques were dishonoured when presented by the plaintiff due to lack of funds. Immediately the staff of the plaintiff went to the premises purchased by defendant No.1 for recovery of monthly instalments and they were shocked to know that the premises was not in the possession of the defendant No.1. When they enquired with defendant No.3, who was the vendor of the defendant No.1, he avoided to reply. The officials of the plaintiff enquired at the office of Sub-Registrar, Uppal about the registration of the sale deed dated 28.04.2003 which was alleged to be registered in Volume No.1 Page 5025 in their office and came to know that the said sale deed was a fake and fabricated document. As such, on 23.03.2004, the plaintiff lodged a complaint before SHO, Narayanaguda Police Station. The same was registered as a case in Crime No.243 of 2004 under Section 420 of IPC. The plaintiff contended that it was a clear case of fraud played by the defendants 1 to 3 to cause financial loss to Dr.GRR,J sa_189_2017 4 the plaintiff company and defendants 1 and 2 signed on various documents in favour of the plaintiff for discharge of the outstanding loan amount along with accrued interest. The defendant No.2 stood as a guarantor who executed the documents in favour of the plaintiff. Therefore, the defendants 1 and 2 were liable to pay the outstanding home loan amount along with interest to the plaintiff. The plaintiff issued cheques in the name of the defendant No.3 on the authorisation given by the defendant No.1 and that defendant No.3 received a cash of Rs.2,50,000/- from the plaintiff and also a sum of Rs.50,000/- was received by Mr. Shiva Prasad in the name of the defendant No.3. Thus the defendant No.3 received sale consideration from the defendant No.1 through the plaintiff company. As such, the defendants 1 to 3 were jointly and severally liable to pay the amount with interest to the plaintiff. The plaintiff got issued registered legal notices to defendants 1 to 3 calling upon them to pay Rs.4,08,356/- from the date of receipt of the notices and that the said notices were sent not only through registered post with acknowledgment due but also under certificate of posting to all the defendants. The defendant No.1 received the notice sent through RPAD, but the defendants 2 and 3 did not claim the same. Notices sent under certificate of post was received by all the defendants. No reply was issued by the defendants, as such, filed the suit.
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4. The defendants 4 and 5 were brought on record as legal representatives of the deceased defendant No.3.
5. The defendant No.1 filed written statement contending that Mr. Shiva Prasad along with Ashok, Naveen, Santosh and Narsingh representing to be builders approached the defendant No.1 with an offer that they were constructing the flats at Habsiguda and that venture was approved for finance by various financial institutions including the plaintiff and produced photocopies of the documents and made him to believe that they were constructing apartments and that he could purchase a flat with the financial assistance provided by the plaintiff. Thus the said persons took him to the office of the plaintiff and introduced to one lady officer of the plaintiff, who informed him that the venture was approved for finance and the quantum of loan would be fixed on the basis of eligibility. The defendant No.1 believed the said builders and produced three months salary slips for the months of November to December, 2002 and January, 2003 and also produced proof of his identity and residence. Thus, the lady officer of plaintiff company obtained the signatures of the defendant No.1 on various papers and also obtained photographs along with seven blank cheques which contained his signatures and thumb impressions on the ground that they were all required for the purpose of sanction of loan. The defendant No.1 further contended that in the month of April-May 2003, the said builders took him to the office of the plaintiff Dr.GRR,J sa_189_2017 6 stating that loan of Rs.2,50,000/- was released and the defendant No.1 was made to sign on some letters. The lady officer stated to defendant No.1 that a sum of Rs.2,50,000/- was sanctioned and the same was released to the builders and the remaining amount of Rs.50,000/- would be released later on at the time of delivery of possession of the flat. Later on the builders never shown the flat nor handed over the physical possession of the same to the defendant No.1. The builders never executed any documents in favour of defendant No.1 in respect of the flat. The defendant No.1 received a letter dated 17.05.2004 from his employer calling upon his explanation on the basis of the letter addressed by the plaintiff alleging that he availed loan from the plaintiff. Then the defendant No.1 for the first time came to know about the release of the loan. Thereafter, the defendant No.1 submitted an explanation to his employer stating all the facts. The defendant No.1 learnt that the builders in collusion with the officers of the plaintiff company presented some fake documents and got released the loan and they misappropriated the said loan amounts by deceiving the defendant No.1 as well as the plaintiff. The defendant No.1 did not receive any letter from the plaintiff informing him about the dishonour of the cheques.
5.1. The defendant No.1 further submitted that the cheques obtained by the plaintiff were fake documents. He had not seen the property which was described in the plaint at any time, except on papers produced by the builders. The Dr.GRR,J sa_189_2017 7 above said builders in collusion with the plaintiff officials not only cheated the defendant No.1 but also other purchasers. He had no role to play in the alleged fraud. He had neither received any amount from the plaintiff nor authorised anyone to receive any amount from the plaintiff. The photographs on the sale deed dated 26.04.2003 do not belong to him. He does not have any acquaintance with the defendant No.2. He never produced the defendant No.2 as guarantor for repayment of the loan. The defendant No.2 was also a henchmen of the so called builders. The alleged loan agreement was void and unenforceable under law. No amount was paid to the defendant No.1 towards loan by the plaintiff nor he obtained the flat from defendant No.3 and prayed to dismiss the suit.
6. The defendant No.2 filed written statement denying the execution of guarantee letters, documents, etc., in favour of the plaintiff to discharge the loan that was sanctioned to the defendant No.1 as alleged by the plaintiff. He contended that he was a total stranger to the entire loan transaction and he was not liable to pay any amount along with other defendants namely defendants 1 and 3. He denied not only the plaintiff's case but also the contentions raised by the defendants 1 and 3 in their written statement.
7. The defendant No.3 filed written statement denying the execution of sale agreement in favour of defendant No.1 and execution of registered sale deed Dr.GRR,J sa_189_2017 8 dated 26.04.2003 in favour of the plaintiff. He contended that defendant No.1 in collusion with defendant No.2 along with the agents of the plaintiff cheated the plaintiff company by depositing false and fabricated documents and obtained loan of Rs.3,00,000/-. He was no way concerned with the acts and commissions committed by defendants 1 and 2. No transaction took place between him and the plaintiff at any point of time as alleged in the plaint. He was not liable to pay any amount much less the suit amount along with defendants 1 and 2 and prayed to dismiss the suit against him.
8. Basing on the said pleadings, the trial court framed the issues as follows:
i. Whether the plaintiff is entitled for the suit claim?
ii. To what relief?
9. On behalf of the plaintiffs, the Area In-charge of the plaintiff company as well as the Area Manager of the plaintiff company, who sanctioned the loan were examined as PWs. 1 and 2. Exs.A1 to A33 were marked on behalf of the plaintiff. The defendant No.1 was examined as DW.1 and the son of defendant No.3, who was arrayed as defendant No.5 was examined as DW.2.
Ex.B1 was marked on behalf of defendants 3 to 5.
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10. The trial court on considering the oral and documentary evidence on record held that the evidence of plaintiff was cogent and trustworthy and that the documents filed by the plaintiff would show that the defendant No.1 made an application to the plaintiff for sanction of loan and he was an employee, diploma holder in Civil Engineering and executed all the documents knowing fully well and also issued cheques in favour of the plaintiff to discharge the loan. The defendant No.2 had also signed as a guarantor and the defendant No.3 received the loan amount, as such all the defendants were jointly and severally liable to pay the amount of Rs.4,08,356/- with subsequent interest at 6% per annum on the principal amount.
11. Aggrieved by the said judgment and decree dated 07.06.2010, the defendant No.1 as well as the defendant No.3 represented by his legal representatives - defendants 4 and 5 preferred two separate appeals vide A.S.Nos.254 of 2010 and 271 of 2010. Both the appeals were heard by the III Additional Chief Judge, City Civil Court, Hyderabad and vide common judgment dated 06.04.2015 dismissed the appeals, confirming the judgment and decree dated 07.06.2010 passed in O.S.No.26 of 2006 by the V Senior Civil Judge, City Civil Court, Hyderabad.
12. The defendants 3 to 5 preferred this Second Appeal.
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13. Heard Smt. I Maamu Vani, the learned counsel for the appellants and Sri G. Vasanth Rayudu, the learned counsel for the respondent No.1-plaintiff on substantial questions of law.
14. The learned counsel for the appellants contended that the trial court as well as the first appellate Court failed to see that the plaintiff did not discharge the burden of proving that the amount of Rs.3,00,000/- was received by the defendant No.3. On the other hand, the cheques said to have issued in favour of defendant No.3 were handed over to a third party who was neither a representative of the defendant No.3 nor authorized by the defendant No.3 to receive the cheque. No specific details about the account said to have been credited with the amount were furnished and no statement of account was filed to prove that the account belonged to defendant No.3. No document was filed by the plaintiff to show that the cheque was encashed by the defendant No.3. The claim was based on a fabricated document marked as Ex.A11. The said fraud would vitiate the claim against the defendant No.3. The defendant No.3 was the owner of the property. He had not executed any deed in favour of the defendant No.1 or the plaintiff. No encumbrance was created by defendant No.3 in favour of the plaintiff in respect of the property owned by him. The first appellate court erred in drawing adverse inference against the defendants 4 and 5 for not establishing the fact that the cheques were not encashed by examining the manager of the bank. When the Dr.GRR,J sa_189_2017 11 plaintiff failed to discharge the burden of proving that the amount was received by defendant No.3 or that the cheque was encashed by him, the burden of proving that the cheque was not encashed would not shift on the defendant No.3. The photograph on Ex.B1 was not tallying with the photograph on Ex.A11. The same would clinchingly establish that defendant No.3 had no knowledge about the entire transaction. The defendant No.3 was an educated person and always affixed signatures, but Ex.A11 was containing the thumb impression of the vendor. As per Ex.A11 which was alleged to be registered on 26.04.2003, the entire sale consideration was paid. Therefore, the question of plaintiff issuing the cheque in favour of the defendant No.3 in May, 2003 would not arise. Even the criminal case was filed only against defendants 1 and 2 and contended that the following substantial questions of law would arise for consideration:
1. Could a defendant be made liable to pay the amount, when it was not proved that the defendant had received any consideration?
2. Whether the burden of proving that the cheques were encashed by the vendor could be said to have been discharged without any proof by mere oral assertions?
3. Whether the plaintiff could approbate and reprobate?
4. Whether the mere oral assertion by plaintiff would prove that the cheques issued in favour of the vendor were encashed by him without filing any statement of the bank account or furnishing bank statement?
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5. Whether the authorisation by vendee would be binding on the vendor?
15. She also contended that the following additional substantial questions of law would arise:
6. Whether claim based on fraudulent document was sustainable?
7. Whether the plaintiff could have been said to discharge the burden of proving that the defendant No.3 had received the amount by mere oral assertion that the cheque was encashed by defendant No.3?
8. Whether the trial court and first appellate court could have concluded that defendant No.3 had received the amount when the plaintiff had withheld the documentary evidence that claimed to show that defendant No.3 had withdrawn the amount?
9. Could a relief be granted to the plaintiff who has failed to produce the best documentary evidence available to establish his claim that the defendant had encashed the cheque?
10. Whether oral assertions contrary to the recitals in Ex.A11 registered sale deed dated 26.04.2003 that the entire sale consideration was paid could be accepted when such assertions show that the cheque was issued after the registration of the sale deed i.e., in May, 2003?
17. The learned counsel for respondent No.1-plaintiff on the other hand contended that none of the questions raised were questions of law, they were only Dr.GRR,J sa_189_2017 13 questions raised on factual issues. The suit filed for recovery of money was decreed by the V Senior Civil Judge, City Civil Court, Hyderabad which was confirmed by the III Additional Chief Judge, City Civil Court, Hyderabad. As such, the Second Appeal was filed against the concurrent findings of the judgment of the courts below. All the questions raised by the learned counsel for the appellants were hypothetical. Whether fraud was played or not was not in issue.
The crossed cheques were encashed by the appellant No.1-defendant No.3. That itself would prove the collusion between all the defendants and prayed to dismiss the appeal.
18. Sub-section (1) of Section 100, C.P.C. says that the second appeal could be entertained by the High Court only if the High Court is "satisfied" that the case involves a "substantial question of law". Sub- section (3) makes it obligatory upon the appellant to precisely state in memo of appeal the "substantial question of law" involved in the appeal. Sub-section (4) provides that where the High Court is satisfied that any substantial question of law is involved in the case, it shall formulate that question. Sub-section (5) provides that the appeal shall be heard only on the question formulated by the High Court under sub-section (4). The High Court should be satisfied that the case involves a substantial question of law and not a mere question of law. When question of law having a material bearing on the decision of the case will be a substantial question of law, if it is not covered Dr.GRR,J sa_189_2017 14 by any specific provisions of law or settled legal principle emerging from binding precedent and involves a debatable legal issue. The substantial question of law would also arise where the court below had decided the matter either ignoring or acting contrary to the legal principles. As a general rule, the High Court would not interfere with the concurrent findings of the courts below. But it is not an absolute rule. Some of the well recognized exceptions are where
(i) the courts below have ignored material evidence or acted on no evidence;
(ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or
(iii) the courts have wrongly cast the burden of proof.
19. The contention of the learned counsel for the appellants was that the first appellate court wrongly placed the burden upon the defendant No.3 to prove that the cheques issued by the plaintiff were encashed by defendant No.3, when no document was filed by the plaintiff with regard to the statement of account of defendant No.3 to prove the encashment of cheque by defendant No.3 which gives rise to the substantial question of law.
20. But a perusal of the judgment of the first appellate court would disclose that the first appellate court on considering the evidence of PWs.1 and 2 and the documents marked under Exs.A1 to A33 held that the initial burden was Dr.GRR,J sa_189_2017 15 discharged by the plaintiff to establish the fact that the loan transaction took place, as such, the defendants 1 and 2 were liable. With regard to the liability of the defendant No.3, it was observed that it was the case of the defendant No.3 that he never executed any document to the plaintiff bank and defendants 4 and 5 relied on Ex.B1 saying that the photograph of the defendant No.3 was not tallying with the photograph under Ex.A11. But both the trial court as well as the first appellate court held that on verification of the photograph under Ex.A11 and also under Ex.B1, Ex.B1 contained a photograph which appeared to be an old photo and the photo under Ex.A11 appeared to be latest one. Ex.B1 was silent as to when it was issued. DW.2 also maintained silence whether it was a new photograph or an old photograph. During the cross-examination of PW.2 by the counsel for defendant No.3, a specific question was put to PW.2 regarding encashment of cheques by defendant No.3 wherein PW.2 deposed that the Janata Co-op. Bank, Secunderabad issued a letter that defendant No.3 encashed the cheques and the accounts were seized by the police.
21. The lower appellate court observed that in view of the categorical evidence, the plaintiff discharged the burden that the cheques were issued in the name of the defendant No.3 and the defendant No.3 encashed the same and it was intimated to the plaintiff by the Janata Co-Op. Bank, Secunderabad. Admittedly, the cheques were issued by the plaintiff in the name of defendant No.3, who was Dr.GRR,J sa_189_2017 16 the vendor and they were crossed cheques. As such, the cheques were deposited in the Janata Co-Op. Bank, Secunderabad in the account of defendant No.3 and were encashed by him.
22. The first appellate court also observed that when once the accounts were seized by the police, which were the subject matter of the criminal cases and the defendant No.3 did not deny the same and failed to give proper explanation as to how the account payee cheques were encashed from his account, as such, the plaintiff discharged the initial burden and the onus was on the defendant No.3 to establish that the cheques were not issued in his name and no cheques were encashed by him, for that purpose, he could have filed his pass books or he could have examined the Manager of the concerned bank wherein he maintained the account, as such, the defendant No.3 was equally liable to answer the receipt of the funds from the plaintiff bank and the transfer of funds in his account and non- returning the same to the plaintiff bank, if he was not concerned with the loan obtained by defendant No.1 from the plaintiff.
23. This Court does not find any perversity in the judgments of the courts below in fixing the liability on the appellant-defendant No.3 and on his legal heirs. All the questions raised by the learned counsel for the appellants were on factual issues and the first appellate court is the final court with regard to the issues Dr.GRR,J sa_189_2017 17 on questions of facts. As such, this Court does not find any substantial questions of law arising in this matter and any necessity to interfere with the judgments of the courts below.
24. In the result, the second appeal is dismissed at the stage of admission. No order as to costs.
Miscellaneous petitions, if any pending shall stand closed.
_____________________ Dr. G. RADHA RANI, J December 27, 2023 ss