M/S. Sonia Electricals vs M/S. S.Sony And Co.
2012 Latest Caselaw 448 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                              RFA No.499/1995

%                                                      23rd January, 2012

M/S. SONIA ELECTRICALS                             ..... Appellant
                   Through:               Mr. Niyazuddin, Adv.

                      versus


M/S. S.SONY AND CO.                                    ..... Respondent

Through: None.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

To be referred to the Reporter or not?

VALMIKI J. MEHTA, J (ORAL)

1. The challenge by means of this Regular First Appeal(RFA) filed

under Section 96 of the Code of Civil Procedure, 1908 (CPC) is to the

impugned judgment and decree of the Trial Court dated 7.3.1995 decreeing

the suit of the respondent/plaintiff for Rs.84,600/- along with pendent lite and

future interest at 12% per annum simple. The suit has been decreed for the

amount of loan of Rs.60,000/- granted by the respondent/plaintiff to the

appellant/defendant.

2. The facts of the case are that the appellant/defendant was given a

loan of Rs.30,000/-by the respondent/plaintiff on 4.5.1983 and another loan of

Rs.30,000/- on 9.6.1983. These amounts were to carry interest at 24% per

annum simple. Since the principal amounts and the interest due were not paid,

the subject suit came to be filed.

3. The defence of the appellant/defendant was that no loan was ever

taken and in fact the blank documents have been manipulated by the father of

one of the partners of the respondent/plaintiff, one Sh. D.R.Soni who was

employed with the appellant/defendant. I may at this stage itself note that the

employee Sh. D.R. Soni was a retired government servant as he had retired as

an Executive Chief Admn. Officer from the Ministry of Defence. Also, the

appellant/defendnat is not a sole proprietorship concern but a partnership

which has three partners.

4. The Trial Court after pleadings were completed framed the

following issues:

"1. Whether there is any privity of contract between the parties. OPD

2. Whether the plaint does not disclose any cause of action and the suit is liable to be dismissed.

3. Whether the defendant borrowed sum of `30,000/- through Inderjeet Talwar from the plaintiff and promised to pay interest @ 24% p.a.

4. Relief."

5. The Trial Court has held that taking of the loan stands proved

from the receipts dated 4.5.1983 and 9.6.1983 which were exhibited as

Ex.PW1/1 and Ex.PW1/2. The Trial Court notes that the witness DW5,

widow of Sh. Inderjeet Talwar did not dispute the signatures of the partner,

Sh. Inderjeet Talwar, and her deceased husband, on the receipts of the loan,

Ex.PW1/1 and Ex.PW1/2. The Trial Court has disbelieved the contention that

the receipts were taken in blank. The Trial Court has referred to the fact that

the defence that the receipts were taken in blank was not taken in reply

Ex.DW5/3 to the legal notice Ex.PW1/3. The Trial Court has also referred to

the fact that the appellant/defendant in spite of being a business concern, did

not file its statement of accounts in the Court, and therefore, an adverse

inference has to be drawn against the appellant.

6. The Trial Court has also disbelieved the stand of the

appellant/defendant that they had a financial limit of Rs.50,000/- from the

bank and therefore they were not in need of any loan from the

respondent/plaintiff. The relevant observations of the Trial Court while

dealing with the issue nos. 1 and 3 read as under:-

ISSUE NO.1

7. PW1 has stated that he is the sole proprietor of M/s. Sonia Electricals and defendant no.2 and 3 are the partners of defendant no.1. He has stated that besides defendant nos. 2 and 3 Sh. Inderjeet Talwar (since dead) was also partner of defendant no.1. He has stated that the defendants through the above Sh. Inderjeet Talwar had taken a loan of `60,000/- being `30,000/- each on two occasions on 4.5.83 and 7.6.83 and agreed to repay the same with interest @ 24% p.a. He has proved Ex.PW1/1 and PW1/2 as the two receipts issued by the above Sh. Inderjeet Talwar in this behalf. He has stated that the said receipts were signed by said Sh. Inderjeet Talwar in his presence. He has proved carbon copy of the demand notice served upon the defendants as Ex.PW1/3. He has stated that the defendants have not paid any amount despite demands. As against this evidence DW5 Smt. Vinod Bala Talwar has stated that her husband and Sh. D.R.Soni father of the plaintiff were looking after her business of defendant no.1. She stated that Sh. Soni used to represent them with the Ministry of Defence and was being given blank documents for dealing with the said department. She has stated that the defendants have never obtained any loan from the plaintiff. In her cross examination by the plaintiff's counsel she has admitted Ex.PW1/1 and Ex.PW1/2 to b e signed by late Sh. Inderjeet Talwar her husband. She has denied that the same were not blank when signed by him. She could not tell any reason as to why they did not mentions the said facts in their reply Ex.PW5/3. She stated having not brought account books. She did not know if the defendants were maintaining any account books of the business. She denied the suggestion that she has not brought the account books as the same contain entry of the suit account to be due from them.

7. In view of the above evidence as appearing on record it is seen that the defendants do not dispute the above two receipts Ex.PW1/1 and Ex.PW1/2 to have been signed by late

Inderjeet Talwar. The story put forth by the defendants about having given the blank documents to the plaintiff's father for the dealing with the defendants with the Ministry of Defence; does not appeal to be logical to this court. The defendants have admittedly not taken any action against the plaintiff if they have deliver any document in blank, to the plaintiff's father and the said documents have been forged by the plaintiff. It is admitted case on record as also appearing from the evidence that the plaintiff demanded the above amount vide notice dated 4.2.1985 Ex.PW1/3. The defendants gave reply to the same on 30.1.1985 vide Ex.DW5/3. This reply does not contain even a word about the above allegations by the defendants that the above documents had been given in blank to the plaintiff's father D.R.Soni and the same have been forged by the plaintiff. As aforesaid DW2 does not know if the defendants maintained any account books. The defendant no. 1 is a business concern and to my mind must be maintaining account books. The said account books have not been produced before this Court. I thus have no hesitation to draw an adverse inference against the defendants that the said account books, if produced, would have shown the suit amount to be outstanding and payable by the defendants. In any case it cannot be said that there is no privity of contract between the parties, in light of the evidence as appearing on record. Even from the above two documents Ex.PW1/1 and ex.PW1/2 being the receipts executed by the defendants in favour of the plaintiff: there is a privity of contract between the parties. The Ld. defendants counsel during arguments could not satisfy this court as to how there is no privity of contract between the parties. I decide this issue in favour of the plaintiff and against the defendants.

ISSUE NO.3

9. As discussed by me above while giving finding Issue No.1 & 2, the defendants admittedly executed the receipts Ex.PW1/1 and Ex.PW1/2. The perusal thereof go to show that the defendants have borrowed a sum of `30,000/- each on

4.5.83 and 9.6.83 by way of the above said two receipts. Vice notice Ex.PW1/3 the plaintiff demanded the above said amount with interest. It was replied by the defendants vide reply Ex.DW-5/3. This reply does not contain any allegations of the delivery of the blank documents by the defendants to plaintiff's father. The said story for the first time has come up as defence in the written statement filed by the defendants. Ld. defendant counsel submitted before me that vide letter Ex.DW-1/1 dated 17.12.1983 they had asked for the cancellation of the passes issued to Sh. D.R. Soni the father of the plaintiff. He submitted before me that the defendants had given blank documents signed by them to the above Sh.D.R.Soni for use in their representation with the Ministry of defence. I do not understand that if the defendants could apply for the cancellation of the passes vide letter Ex.DW-1/1 : why they did not take any action against the plaintiff or his father regarding the above delivery of the blank documents, which are stated to have been forged by them, being the receiptEx.PW1/1 and Ex.PW1/2. P1/1 has stated in his testimony that the above amount of `60,000/- was paid as loan to the defendants and the same is duly shown in his income tax return for the year 1983-84 and 1984-85. The defendants counsel submitted before me that the defendants were availing a financial limit from the bank as proved by DW2 for `50,000/- and these are not in need of any money from the plaintiff. It cannot be any ground to my mind to believe that the plaintiff could not have advanced loan to the defendant for the amount in suit. It is stated by PW1 in his testimony that the defendants were in financial difficulty as they had a contract for coolers and had to invest money therein. The obtaining of the loan facility by the defendant from the above bank also goes to show that their financial position was not sound which necessitated them to obtain the loan from the said bank. The submissions of the defendant counsel thus carry no weight. Moreover to my mind it was not required of the plaintiff to ask from the defendants the reason of their seeking the above loan of `60,000/-. The said

reason could only be in the mind of the defendants. The defendants as above have examined only DW5 Smt. Vinod Bala Talwar who has stated that she has never attended the business of defendant no.1. In these circumstances to my mind the defendant should have examined the other defendants who could have been aware with the facts of the case. It is thus seen that the defendant did take two loans of `30,000/- each by way of two receipts Ex.PW1/1 and Ex.PW1/2 from the plaintiff. The plea of the defendants that their signatures had been obtained by the plaintiff's father on blank documents is again negivated by the fact that the perusal of the two documents goes to show that the same bear the signatures of late Sh. Inderjeet Talwar as partner of defendant no.1 on a revenue stamp. The said signatures start from one end of paper, cross the revenue stamp and then pass on the other side of the paper. They also bear the rubber stamp of defendant no.1. It cannot be said b any stretch of imagination that the said documents had been delivered b y Sh. D.R. Soni in blank. It is pertinent to mention her that DW2 H.L.Chumber was partly examined by the defendant on 12.1.1988. His remaining statement was deferred but he was never examined thereafter by the defendants and instead the defendants examined DW3 S.K.Rewai from the concerned bank. The result of the above discussion is that the plaintiff has proved to the satisfaction of this court having paid, the amount of `60,000/- as temporary loan re-payable with interest to the defendant. PW1 has stated that the plaintiff is entitled to recover interest on the above amount @24% p.a. It is so written in the above two receipts Ex.PW1/1 and Ex.PW1/2. I thus decided this issue in favour of the plaintiff and against the defendant." (underling added)

7. I may note that a reading of the aforesaid paras shows that the

following conclusions can be arrived at:-

i) The signatures on the receipts with respect to the loan taken by

Mr. Inderjeet Talwar are not disputed.

ii) The appellant/defendant failed to produce account books and

therefore an adverse inference was rightly drawn, and which is a very

crucial aspect because all business concerns have their books of accounts

and ledgers, and if really no loan was taken the books of accounts would

have shown this, but the account books were not filed, obviously to

conceal the entries therein with respect to the loans.

iii) The signatures of Sh. Inderjeet Talwar are across revenue stamps,

and therefore, it is not possible, signatures across revenue stamps were

taken for dealing with the Government Department. This aspect can be

better understood when we compare Ex.DW5/1 & Ex.DW5/2, both the

documents having been filed by the appellant/defendant. The document

Ex.DW5/2 is blank letter containing signatures of Sh. Inderjit Talwar but

the signatures are not put across revenue stamps and thus would be for

Government departments, but Ex.DW5/1 is a letter containing blanks of a

loan receipt letter where the signatures of Sh. Inderjeet Talwar appear

across revenue stamps, thus showing that the latter document Ex.DW5/1

was not meant for Government Departments as the contents of the same

show, read with the factum of signatures of Sh. Inderjeet Talwar across

revenue stamps.

iv) No action was taken against Mr. D.R.Soni by the

appellant/defendant on the ground of any alleged forgery.

8. In addition to the above, there are two other additional points

which show the lack of any strength in the case of the appellant/defendant.

The first point is that it has come on record in the cross-examination of the

Bank Manager, DW2 that though there was a financial limit of Rs.50,000/-,

not more than Rs.10,000/- could be withdrawn each month. Therefore, quite

clearly when the need was to take a loan for a sum of Rs.60,000/- not only

would the amount of Rs.10,000/- be inadequate, but in two consecutive

months only `20,000/- could be withdrawn whereas the loan taken was of

Rs.60,000/-. The case of the appellant/defendant is therefore not believable

that they had enough monies with them for the loan being not taken . The

second aspect is the document, Ex.DW5/1 filed by the appellant/defendant in

the Trial Court. This document was exhibited by the main witness of the

appellant/defendant, Smt. Vinod Bala Talwar, widow of late Sh.Inderjeet

Talwar. This document reads as under:

"Sonia ELECTRICALS

ELECTRICAL ENGINEERS & GOVT. CONTRACTORS

E-220, NEW RAJINDER NAGAR, NEW DELHI-110060 PHONE: 58 59 94

No.......... Dated............

Received with thanks from.................................................. resident of............................................................................ a sum of ` 10,000/- (Rupees Ten thousand only) as loan for a period of six months at 18% (Eighteen percent) per annum. The amount of principal with interest shall be repayable after six months from the date above mentioned.

SIGNED ACROSS REVENUE STAMPS

(INDERJIT TALWAR)

Witness:

_______________"

I am referring to this admitted document (having been filed by

the appellant) as this document itself shows that the partner, Sh. Inderjeet

Talwar used to regularly take loans as this document Ex. DW5/1 reproduced

above shows taking of `10,000/- as loan for a period of 6 months at 18% per

annum interest. Obviously, the appellant/defendant was habitual of taking

loans for the business. The Trial Court has not referred to this document,

however, this document makes it clear beyond doubt that the

appellant/defendant used to regularly take loans, and therefore, there is no

reason to disbelieve the receipts Ex.PW1/1 and Ex.PW1/2 with respect to two

loans of `30,000/- each produced by the respondent/plaintiff.

9. There is however, one aspect which has not been argued on

behalf of the appellant/defendant, but, I feel in this regard the impugned

judgment needs to be interfered with. This aspect is with respect to the high

rate of pre-suit interest of 24% per annum. It has been held by a Division

Bench judgment of this Court in the case of Pandit Munshi Ram Associates v.

D.D.A, 2010(9) AD (Delhi) 313, that high rates of pre-suit interest are in fact

violative of public policy. I find that high rate of pre-suit interest at 24% per

annum is violative of public policy. I therefore hold that the

appellant/defendant will only be liable to pay interest at 12% per annum

simple from the date of grant of the loans to the date of filing of the suit. So

far as the pendent lite and future interest is concerned, the Trial Court has

granted the same at a reasonable rate of 12% per annum simple and therefore

the same calls for no interference.

10. A civil suit is decided on balance of probabilities. The

preponderance of probabilities in the present case shows that the loan was in

fact taken and as demonstrated from Ex.PW1/1 and Ex.PW1/2, the

appellant/defendant did not have sufficient balance in its bank accounts when

the loans were taken inasmuch as there was a restriction of withdrawing of

amounts in excess of `10,000/- per month in the financial limit with the bank,

and, the document Ex.DW5/1 shows that Mr. Inderjeet Talwar on behalf of

the partnership firm/appellant/defendant used to regularly take loans. In view

of the above, the Trial Court has rightly decreed the suit.

11. In view of the above, appeal is dismissed except to the extent of

reducing the pre-suit rate of interest from 24% to 12% per annum simple. The

suit of the respondent/plaintiff therefore will stand decreed for a sum of

`60,000/- with interest at the rate of 12% per annum simple from 4.5.1983 on

an amount of `30,000/-, and on the other amount of `30,000/- interest at 12%

per annum simple is granted till the date of filing of the suit from 9.6.1983.

Rest of the impugned judgment is sustained. Parties are left to bear their own

costs. Decree sheet be prepared. Trial Court record be sent back.

VALMIKI J. MEHTA, J JANUARY 23, 2012 ak