Andhra Pradesh High Court - Amravati
Sri Yerra Constructions vs Smt. Mohammad Noorafshan on 15 February, 2024
APHC010516452010
IN THE HIGH COURT OF ANDHRA PRADESH ::
AMARAVATI
(Special Original Jurisdiction) [
3365
]
THURSDAY ,THE FIFTEENTH DAY OF
FEBRUARY
TWO THOUSAND AND TWENTY FOUR
PRESENT
THE HONOURABLE JUSTICE DR V R K KRUPA SAGAR
FIRST APPEAL NO: 516 OF 2010
aggrieved by the judgment and decree dated in O.S.No. 20 of 2007
dated 04-02-2010 on the file of the Principal District Judge, East
Godavari at Rajahmundry.
Between:
1. Sri Yerra Constructions, Rep. by its Proprietor Yerra Guru Dev,
S/o. Sree Ramulu Business R/o. Jampeta, Rajahmundry, East
Godavari District.
2. Yerra Guru Dev, S/o. Sree Ramulu R/o. Jampeta, Rajahmundry,
East Godavari District.
...APPELLANT(S)
AND
1. Smt Mohammad Noorafshan, W/o. Sri Mohammad Ajamthulla
Baig Medical Profession R/o. D.No. 18-24-2D, Sangeetha
Venkata Reddy Street, Mantehna Gardens, Rajahmundry,
...RESPONDENTS
I.A. NO: 2 OF 2010(ASMP. NO: 8099 OF 2010)
Petition under Section 151 CPC praying that in the
circumstances stated in the affidavit filed in support of the petition,
the High Court may be pleased
I.A. NO: 1 OF 2011(ASMP. NO: 120 OF 2011)
Petition under Section 151 CPC praying that in the
circumstances stated in the affidavit filed in support of the petition,
the High Court may be pleased grant interim stay of all further
proceedings including the Execution proceedings in EP.No. 79 of
2010 on the file of the Ist Additional District Judge, East Godavari at
Rajahmundry arising out of the Decree andJudgment dated 4th
February 2010 in OS.NO. 20 of 2007 on the file of the Principal
District Judge, East Godavari at Rajahmundry pending disposal of
the appeal
Counsel for the Appellant(s):SRI. Y SUDHAKAR
Counsel for the Respondents: T V JAGGI REDDY
The Court made the following JUDGMENT:
1. Defendants in the suit preferred this appeal under section
96 of the CPC impugning the judgment dated 04.02.2010 of
learned Principal District Judge, East Godavari at Rajahmundry
in O.S.No.20 of 2007. The sole respondent herein was the sole
plaintiff in the suit.
2. Sri Y. Sudharkar, the learned counsel for appellants and
Sri T.V. Jaggi Reddy, the learned counsel for respondent
submitted their arguments.
3. O.S.No.20 of 2007 was filed by the plaintiff alleging that 1st
defendant is a propriety concern represented by its proprietor Sri
Yerra Guru Dev/ 2nd defendant and they fell due in their loan
account with the Aryapuram Co-Operative Urban Bank Limited,
Rajahmundry to a tune of Rs.8,66,701/- and as they failed to pay
and as the Bank initiated arbitration proceedings as against the
propriety concern and its proprietor as well as the plaintiff,
plaintiff had to pay the overdraft loan amount to the Bank as she
stood as a guarantor and kept her property as security and she
accordingly paid it and demanded the defendants to repay and
since they failed to repay, the suit was laid for recovery of
principal amount along with interest overdue coming up to a total
of Rs.13,72,341/- and prayed for 24% interest and for costs and
such other reliefs. The relationship between the parties is
mentioned in the plaint showing that there was a development
agreement between the plaintiff/ landlord and the defendants as
builders. It was out of that acquaintance, plaintiff allegedly stood
as a guarantor.
4. Resisting the suit, defendants filed a written statement
wherein it is stated that the loan amount of Rs,10,00,000/- was
obtained by the defendants as well as plaintiff together and they
received the money in equal shares at the rate of Rs.5,00,000/-
each. It was agreed among the parties that the plaintiff would pay
the bank loan and the defendants would execute registered sale
deeds concerning two flats to the plaintiff and accordingly
defendants registered two flats and therefore they were no more
liable to pay the plaintiff the alleged debt. The two sale deeds
executed were without any consideration since the consideration
agreed is discharge of bank loan by the plaintiff. That the plaintiff
failed to clear the bank loan. That there is no contract concerning
loan between the parties to the suit. Plaintiff is not entitled for
any relief. Plaintiff never issued notice demanding repayment. For
these reasons, they sought dismissal of the suit.
5. Learned Principal District Judge, on considering the rival
submissions settled the following issues for trial:
1. Whether the defendants execute two registered sale deeds
in the months of February and September 2002
respectively in addition to the registration of 5 flats under
coercion and on a condition that the plaintiff would have
cleared the debt covered under the collateral security but
the plaintiff failed to do so?
2. Whether there is no legally enforceable debt existing
between the plaintiff and the defendants?
3. Whether the defendants alone realized the loan amount in
full?
4. Whether the plaintiff paid the amount with a view to save
her property from the execution proceedings of the bank
and to ward off the same or not?
5. Whether the particulars of payment alleged to be made by
the plaintiff are true or not?
6. Whether the plaintiff is entitled to recovery of the suit
amount with interest at 24% per annum?
7. Whether the suit is not correctly valued?
8. To what relief?
6. To sustain their respective claims, plaintiff testified as
PW.1 and got examined two bank officers as PWs.2 and 3 and got
marked Exs.A1 to A33 and Exs.X1 to X6. 2nd defendant/ Sri Yerra
Gurudev testified as DW.1 and did not produce any document as
evidence.
7. On considering the rival submissions and the entire
evidence on record, the learned Principal District Judge found
truth with the case of the plaintiff and decided all the issues in
favour of the plaintiff and decreed the suit in the following terms:
"In the result, the suit is decreed with costs in favour of the
plaintiff and against the defendants for Rs.11,04,730/- (Rupees
eleven lakhs four thousand seven hundred and thirty only) with
subsequent interest at 12% per annum from the date of suit till the
date of realization of the amount on the principal amount of
Rs.8,66,701/-."
8. Aggrieved by it, defendants preferred this appeal
contending that lower court committed error in not appreciating
the evidence of DW.1 and had it considered the same, it would
have dismissed the suit. That these appellants/ defendants
registered two flats and thereby the subject loan was discharged
by them. Suit ought not to have been decreed in the absence of
notice prior to the institution of the suit. There is no legally
enforceable debt enabling the plaintiff to claim against the
defendants/ appellants but the trial court, against the merits of
the evidence, erroneously granted the judgment and decree in
favour of the plaintiff and that shall be set aside.
9. During the arguments, learned counsel for appellants also
contended that granting of interest by the trial court is on higher
side and that deserves to be scaled down.
10. As against the above submissions, the learned counsel for
respondent/plaintiff argued that the substance of the plea
adopted in the written statement by the defendants/ appellants
is one of discharge and the discharge is claimed on the ground
that two sale deeds were executed in favour of the plaintiff and
the appellants/ defendants failed to prove the discharge by filing
the copies of those sale deeds. Ex.X4 and Ex.X6 would indicate
that the loan was standing only in the name of defendants/
appellants and they were liable to pay and as per the evidence of
PWs.1 and 3, the entire loan amount payable by the defendants
to the Bank was paid by the plaintiff and such payment was made
because plaintiff was the guarantor for the debt borrowed by the
defendants. That the learned trial court fully considered the
evidence and rightly recorded its conclusions and there is
absolutely no warrant for interference in this appeal and the
appellants/ defendants do not deserve any concession in the rate
of interest. Learned counsel for respondent seeks dismissal of the
appeal.
11. On considering the material on record and on considering
the rival submissions made before this court, the following points
fall for consideration: -
1. Whether the loan was obtained by appellants
alone or it was obtained by the respondent and
appellants together?
2. Who discharged the Bank loan - Is it appellants
or is it respondent?
3. Did the appellants transfer two flats to the
plaintiff/ respondent and thereby the legal
obligation was on respondent/ plaintiff to pay the
loan amount to the Bank?
4. Whether the learned trial court failed to
appreciate the evidence and reached to erroneous
conclusions?
5. Whether the rate of interest granted by the
learned trial court is incorrect?
POINTS: -
The pleadings on both sides unanimously admit that the
loan amount of Rs.10,00,000/- was disbursed by Aryapuram Co-
Operative Urban Bank Ltd, Rajahmundry. This disbursal was
made based on overdraft facility provided by the Bank. The
evidence of PW.3 and Exs.X4 and X6 do indicate that the loan
amount was disbursed in the name of Yerra Constructions
represented by Yerra Guru Dev/ appellants. The evidence also
disclosed that the respondent/ plaintiff stood as a guarantor for
this loan amount. It is in the backdrop of these facts and findings,
the dispute between the parties has to be resolved.
12. One of the contentions raised in the appeal is that evidence
of DW.1 was not properly considered by the court below. This
court has gone through the entire evidence of DW.1. In his
evidence, DW.1/ 2nd defendant/ 2nd appellant stated that he
committed default in payment of loan to the Bank and the Bank
authorities issued notice to him. He also said that plaintiff stood
as a surety. In his cross-examination, he said that he paid some
part of the loan amount and plaintiff paid some part of the loan
amount to the Bank. He admitted that these payments which he
was speaking in his evidence were never pleaded by him in the
written statement. He admitted that he did not produce any
document showing any such payment on his part. He admitted
that he has been maintaining accounts and there also he did not
make any entries about the alleged payment made by him to the
Bank. He was unable to say as to how much of the amount of the
loan was paid by him. In his cross-examination, he categorically
admitted that to receive the loan amount, he opened a current
account and received Rs.10,00,000/- loan amount. All this
evidence goes to show that the appellants received
Rs.10,00,000/- as loan from Aryapuram Co-Operative Urban
Bank Ltd. Appellants failed to disclose through evidence any
payments made by them to the Bank towards this loan amount.
Thus, appellants did not discharge the debt by way of repayment
of loan to the Bank. As against it, the evidence of PW.1 and 3
show that plaintiff/ respondent paid the overdue amount of the
loan to the Bank evidenced by Ex.A1 receipt issued by the Bank
to a tune of Rs.7,66,701/- and under Ex.A2 certificate issued by
the Bank showing that plaintiff discharged the loan amount due
from the defendants. The evidence also disclosed that under
Ex.X3 and Ex.X6 on 30.06.2004, plaintiff had paid Rs.1,00,000/-
towards discharge of the loan amount. Learned trial court on
considering all this evidence concluded that the overdue amount
was Rs.8,66,701/- and that was due from defendants and that
they did not pay and the plaintiff paid it and discharged that loan
amount.
13. A perusal of the evidence of DW.1 would show that in his
cross-examination, he categorically admitted that he has no
document to show that out of Rs.10,00,000/- loan, he availed
Rs.5,00,000/- and remaining Rs.5,00,000/- was received by the
plaintiff either from him or from the Bank. He admitted that there
is no document among the parties whereunder one could see
plaintiff attempting to have availed loan to that part of
Rs.5,00,000/- and concerning that defendants had no obligation
to pay and the obligation to repay that Rs.5,00,000/- was on the
shoulders of the plaintiff herself. Thus, the pleaded case of the
defendants/ appellants about the loan amount being shared by
parties in equal measure remained a contention without any
acceptable evidence. Learned trial court appreciated these facts
and rejected the contention of the defendants and held that
plaintiff never enjoyed any part of the loan amount. Another
contention of the appellants was that the appellants discharged
the debt by transferring two flats to the plaintiff. It is undisputed,
the record indicates, that in evidence of such transfer of two flats,
the appellants did not exhibit any document. On the other hand,
the evidence on record and the findings of the trial court would
indicate that the plaintiff had paid consideration and had
received two flats by way of purchase from third parties. Thus,
even from the evidence of DW.1, one would notice that the
appellants did not repay any part of the loan outstanding with
the Bank and they did not show transfer of ownership of two flats
to the plaintiff and the evidence also indicates total discharge of
debt by the respondent/ plaintiff. The contention of the
appellants that the trial court did not appreciate the evidence
properly is a contention without any merit. A reading of the
impugned judgment discloses that the learned trial court
considered the entire evidence on record. This court on further
considering the evidence including that of DW.1, fully agrees with
the findings recorded by the trial court. The contention of the
appellants that there is no legally enforceable debt between the
parties is incorrect on facts and law. Where a guaranteed debt
has become due because of default of the principal debtor, the
surety, upon payment, is invested with all the rights which the
creditor had against the principal debtor is the mandate under
Section 140 of the Indian Contract Act, 1872. When the evidence
disclosed that the respondent/ plaintiff stood as a guarantor for
the loan borrowed by appellants/ defendants and when she paid
the overdue loan amount to the creditor bank, she step into the
shoes of the creditor and therefore entitled to seek refund from
the principal debtors/ appellants.
14. In the plaint, plaintiff claimed 24% interest. About
entitlement for interest and the rate of interest, learned Principal
District Judge bestowed serious attention while answering issue
No.6 and finally held that considering the nature of the
transaction between the parties, the plaintiff could claim only
12% interest and granted the same. The observation of the
learned trial court at Para No.12 is that defendants/ appellants
have tried to cheat the plaintiff/ respondent even though the
plaintiff helped them in obtaining loan by putting her property as
security and by standing as a guarantor. Those observations are
based on evidence available on record. In such circumstances,
there could be no allowance to consider the prayer of the
appellants for reduction of rate of interest. This court finds no
error on facts and law in the impugned judgment warranting
interference of this court. The contentions raised in the appeal
are without any merit.
All the points are held against the appellants.
15. In the result, this appeal is dismissed with costs.
Consequently, judgment dated 04.02.2010 of learned Principal
District Judge, East Godavari at Rajahmundry in O.S.No.20 of
2007 is confirmed.
As a sequel, miscellaneous petitions, if any pending, shall
stand closed.
_____________________________
Dr. V.R.K.KRUPA SAGAR, J
Date: 15.02.2024 Dvs
THE HON'BLE JUSTICE Dr. V.R.K.KRUPA SAGAR
Date:15.02.2024
Dvs
