Nanak Chand Jain & Anr. vs Harish Chander Sabharwal
2013 Latest Caselaw 1600 Del

$~R-78
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+    RFA 636/2004
                         Decided on 9th April, 2013

      NANAK CHAND JAIN & ANR.                       ..... Appellants

                         Through:        Mr. H.K. Monga, Adv.

                   Versus

      HARISH CHANDER SABHARWAL                      ..... Respondent

                         Through:        None.


CORAM:
HON'BLE MR. JUSTICE A.K. PATHAK


A.K. PATHAK, J.(ORAL)

1. This appeal is directed against the judgment and decree

dated 18th September, 2004 passed by Additional District Judge

whereby money decree in the sum of `3.50 lacs together with

pendente lite and future interest @ 9% per annum with effect from

January, 2000 and costs of the suit has been passed in favour of

respondent and against the appellants.

2. Respondent (plaintiff) had filed a suit for recovery of

`5,10,000/- together with pendente lite and future interest @ `24%

per annum along with costs of the proceedings against the

appellants (defendants). Appellant no.1 is father of appellant no.2.

Respondent alleged in the plaint that appellant no. 2 was his friend.

On 2nd July, 2001 both the appellants approached the respondent

seeking financial help to the tune of `5 lacs. It was represented

that appellant no.1 required money for the purchase of an

immovable property. On persistent requests of appellant no. 2,

respondent agreed to extend financial assistance to appellant no.1.

Appellant no. 2 offered to stand as a guarantor for repayment of

borrowed sum. Accordingly, respondent paid a sum of `3.50 lacs

to the appellants through three bearer cheques bearing numbers (i)

253486 dated 2nd July, 2001 for `1 lac, (ii) 526007 dated 13th

August, 2001 for `50,000/- and (iii) 526010 dated 23rd August,

2001 for `2,00,000/- all drawn on UTI Bank, Pitampura Branch,

Delhi. Cheques were encashed by appellant no.2 and amounts

were passed on to the appellant no.1. Appellants had assured to

return the loan on or before 31st December, 2001, however, loan

was not repaid despite repeated demands. Hence the suit for

recovery of `3.50 lacs besides interest @ 24% per annum.

Appellants were liable to pay interest as per mercantile custom,

usage and market trend.

3. Appellants filed separate written statement(s). Appellant

no.1, in his written statement, denied having borrowed any money

from the respondent. He also denied that appellant no.2 was friend

of respondent. He denied that he approached the respondent for

financial assistance or that respondent had paid `3.50 lacs to him

by way of three bearer cheques. It was further denied that

appellant no. 2 had encashed the alleged cheques and handed over

the money to him. He also denied that appellant no.2 guaranteed

the due repayment. In his written statement, appellant no.2 denied

that he was friend of respondent. However, he admitted that

respondent was known to him. He also denied that respondent had

given any loan to appellant no.1. Appellant no. 2 denied that he

guaranteed the due repayment of loan. It was alleged that no

documentary proof was placed on record by the respondent to

support his version. He stated that he got encashed the three bearer

cheques on behalf of the respondent and handed over the money to

respondent. He further alleged that he got the bearer cheques

encashed at the request of respondent. Mere encashment of the

cheques was not sufficient to indicate that respondent had extended

any loan to either of the appellants. It was further alleged that on

23rd August, 2001 appellant no.2 was travelling with respondent on

his scooter when respondent dropped him in front of his bank and

requested him to encash the cheques on his behalf as he had to go

somewhere else and the bank was likely to close for lunch.

Respondent appended his signatures on the back of cheque dated

23rd August, 2001 which indicates that same was encashed by him.

Respondent filed replication(s) to the written statement(s) of

appellants and denied the allegations levelled therein while

reiterating the averments made in the plaint.

4. On the pleadings of the parties following issues were framed

by the trial court:-

"1. To what amount the plaintiff is entitled for a recovery from the defendants?"

2. Relief, if any"

5. Respondent examined himself as PW1. Mr. Sanjiv Verma,

Deputy Manager, UTI Bank was examined as PW-2. As against

this appellants examined themselves as DW-1 and DW-2

respectively. Cheques were proved as Ex. PW2/1 to Ex. PW2/3.

Trial Court examined the evidence lead by the parties threadbare

and held that respondent had been successful in proving issue no.1,

consequently, decreed the suit.

6. I have heard the learned counsel for appellants and perused

the trial court record carefully and do not find any illegality or

perversity in the impugned judgment, inasmuch as, same is

inconsonance with the evidence adduced by the parties before trial

court. Version of PW1 has remained consistent and inspires

confidence, inasmuch as, is supported by documentary evidence,

that is, Ex. PW2/1 to Ex. PW2/3. His testimony has remained

unshattered in his cross-examination. Ex. PW2/1 is a cheque dated

2nd July, 2001 bearing no.253486 for `1 lac. Ex. PW2/2 is a

cheuqe bearing no. 526007 dated 13th August, 2001 for `50,000/-

whereas Ex. PW2/3 is cheque bearing no. 526010 dated 23 rd

August, 2001 for `2 lacs. All these cheques are bearer cheques

duly signed by the respondent. These cheques also contain

signatures of appellant no.2 on the reverse side which indicates that

same were encashed by the appellant no.2.

7. In their cross-examination, DW1 and DW2 have also

admitted that cheques were encashed by the appellant no. 2 though

it was contended during the course of hearing that Ex. PW2/1 was

encashed by the respondent since his signatures were also there on

the reverse side of the cheque. Statements of DW1 and DW2 are

shaky, inasmuch as, they have taken shifting stand. In my view,

statement of PW1 has to be preferred and has rightly been accepted

by the trial court as against the version of appellants who are not

trustworthy and reliable witnesses. PW1has categorically deposed

that appellant no.2 was his friend and appellant no.1 is father of

appellant no.2. On 2nd July, 2001 both the appellants approached

him and sought financial help of `5 lacs. Appellant no.2 offered his

guarantee for repayment of financial assistance extended to

appellant no.1. All these three cheques were given to appellant

no.1 but were encashed by appellant no.2 and the money was

ultimately given to appellant no.1. Though, initially, DW1

(appellant no.1) showed his ignorance about this fact but in his

cross-examination he has admitted that the amounts involved in the

cheques were withdrawn by the appellant no.2. As regards his

meeting with respondent he had denied the fact in the pleadings but

in his cross examination he gave evasive reply on this issue. He

stated that he cannot say if he had accompanied the appellant no.2

on 2nd July, 2001, 3rd August, 2001 and 23rd August, 2001. This

clearly shows that appellant no.1 is not a trustworthy and reliable

witness. Appellant no.2 has also not denied in his cross-

examination regarding encashment of cheques by him, however, he

has deposed that the amounts were withdrawn at the instance of

respondent and were made over to the respondent but no cogent

evidence in this regard has been adduced by the appellants. When

statement of respondent is evaluated vis-à-vis statements of

appellants in balance scales tilt in favour of respondent in view of

consistent stand taken by him together with the fact that cheques

were encashed by appellant no.2 which fact is supported by Ex.

PW2/1 to Ex. PW2/3.

8. In Mathura Das and Ors. versus Secy. of State and Anr. AIR

1930 ALL848, a Single Judge of Allahabad High Court held that a

contract of indemnity or a contract of guarantee may be created

either by parol or by a written instrument. Ch.8 Contract Act, is

not exhaustive on the subject. A contract of guarantee need not

necessarily be in writing; it may be express, by words of mouth, or

it may be tacit or implied and may be inferred from the course of

conduct of the parties concerned. The above view has been

followed in Nandlal Chanandas versus Firm Kishinchand-Butamal

AIR 1937 Sindh 50. From the statement of PW1, which inspires

confidence, it is proved that loan was extended to appellant no.1

and appellant no. 2 assured the repayment.

9. Since the loan was not returned by the appellants, in my

view, trial court has rightly held that appellants are liable to pay

interest to the respondent since they have benefitted themselves by

retaining the amounts and respondent has been deprived of the use

and benefit of the said amounts. Rate of interest, as awarded by the

trial court, requires no interference. However, to my mind, trial

court has erred in awarding interest from 1st January, 2000 more so

when cheques pertain to the period July-August, 2001.

Accordingly, decree is modified to the extent that respondent

would be entitled to `3.50 lacs together with interest @ 9% per

annum with effect from 1st September, 2001 till the realization of

decretal amount. Respondent shall also be entitled to costs of the

proceedings.

10. Appeal is disposed of in the above terms.

A.K. PATHAK, J.

APRIL 09, 2013 ga