M/S Hansa Electricals & Ors. vs D.N.Wadhwa (Deceased) Through ...
2013 Latest Caselaw 5350 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

                                      Date of decision: 21st November, 2013.

+                                RFA 149/2005

       M/S HANSA ELECTRICALS & ORS.            ..... Appellants
                    Through: Mr. Alok Mahajan and Mr. Rajesh
                             Arya, Advocates.

                                 Versus

    D.N.WADHWA (DECEASED) THROUGH LR'S ... Respondents
                  Through: Mr. M.S. Vinaik, Advocate.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. The appeal impugns the judgment and decree (dated 30th November,

2004 of the Court of the Additional District Judge (ADJ), Delhi in Suit

No.194/2003 filed by the deceased respondent/plaintiff) for recovery of

Rs.8,40,000/- jointly and severally from the three appellants/defendants

together with costs and interest pendente lite and future @ 10% per annum.

2. Notice of the appeal was issued and subject to the

appellants/defendants depositing the entire decretal amount in this Court,

execution was stayed. In compliance therewith, a sum of Rs.8,40,000/- only

was deposited and no amount of interest pendente lite and till the date of

deposit, also decreed was deposited by the appellants/defendants. However,

no objection in this regard was taken by the deceased respondent. The

amount deposited was ordered to be kept in a Fixed Deposit Receipt (FDR).

The appeal was on 2nd March, 2006 admitted for hearing and the earlier

interim order made absolute.

3. The counsels for the parties have been heard.

4. The counsel for the appellants/defendants has contended that out of

the decretal amount of Rs.8,40,000/-, Rs.5,25,000/- was the principal

amount and the balance was the interest @ 24% per annum till the date of

institution of the suit. He further contended that the principal amount of

Rs.5,25,000/- also comprises of two components i.e. Rs.4,40,000/-, the

decree for recovery of which is challenged and the sum of Rs.85,000/-, the

decree for recovery of which part is now not challenged by the

appellants/defendants. He further contended that the appellants/defendants

however challenge the grant of pre-institution interest @ 24% per annum on

the said sum of Rs.85,000/- as well.

5. The counsel for the appellants/defendants has further contended,

(i) that the deceased respondent was a partner in the

appellant/defendant No.1 along with the appellants/defendants No.2

& 3 for nearly 31 years;

(ii) that the said partnership firm was dissolved with effect from

31st March, 1991, with the deceased respondent / plaintiff opting to

retire therefrom and the appellants/defendants No.2 & 3 namely Mr.

Hans Raj Kapur and Mr. Rakesh Kapur opting to continue the

partnership business;

(iii) that two documents i.e. Dissolution Deed and an Agreement,

both dated 31st March, 1991 were executed by the parties in this

regard and whereunder the appellants/defendants agreed to pay and

the deceased respondent/plaintiff agreed to receive a total sum of

Rs.5,00,000/- out of which Rs.1,15,000/- was paid and receipt thereof

acknowledged in the documents itself and the balance Rs.3,85,000/-

was agreed to be paid vide post dated cheques dated 28th April, 1991,

28th May, 1991, 28th July, 1991, 28th August, 1991 all for Rs.75,000/-

and cheque dated 28th September, 1991 for Rs.85,000/-;

(iv) that the deceased respondent / plaintiff however filed the suit

for recovery of Rs.4,40,000/- aforesaid on the basis of yet another

cheque dated 10th April, 1991 of the appellant/defendant No.1 firm in

favour of the deceased respondent, claiming that the said amount of

Rs.4,40,000/- had also been agreed to be paid by the

appellants/defendants to him in settlement of the accounts of the

erstwhile partnership but had been returned dishonoured;

(v) that the appellants/defendants contested the suit, by not

disputing the issuance of the said cheque of Rs.4,40,000/- but

pleading the same to have been issued towards a friendly loan agreed

to be advanced by the appellants/defendants to the deceased

respondent / plaintiff with whom they had a 31 years relationship and

that though the appellants/defendants subsequently on account of

their financial hardship had asked the deceased respondent / plaintiff

not to present the said cheque but the deceased respondent / plaintiff

presented the cheque and upon dishonour thereof, filed the suit for

recovery of the amount thereof;

(vi) that there could be no payment of Rs.4,40,000/- due to the

deceased respondent / plaintiff towards dues of the erstwhile

partnership business over and above the amount mentioned in the

Dissolution Deed and the Agreement, both dated 31st March, 1991, in

full and final settlement of all accounts of the partnership;

(vii) that the learned ADJ has also observed the said amount of

Rs.4,40,000/- to be „presumably‟ due towards the erstwhile

partnership and not given any categorical finding in this regard;

(viii) that the decree for the said sum of Rs.4,40,000/- is thus bad and

unsustainable in law;

(ix) that though the liability for Rs.85,000/- is now admitted but the

said amount also could not be paid owing to the excessive rate of

interest @ 24% per annum awarded thereon also for the pre-

institution period;

(x) that the said cheque dated 10.04.1991 for Rs.4,40,000/- was not

presented by the deceased respondent / plaintiff immediately after the

date thereof but after several months, in September/October, 1991.

6. It has been enquired from the counsel for the appellants/defendants

whether the cheque for Rs.4,40,000/- was presented after the dates of all the

post dated cheques given under the Dissolution Deed/Agreement dated 31 st

March, 1991.

7. The counsel for the appellants/defendants replies in the affirmative.

8. It has next been enquired from the counsel for the

appellants/defendants as to why a cheque dated 10th April, 1991, if towards

friendly loan, will not be presented immediately after 10 th April, 1991 and

be presented after nearly 5/6 months in September/October, 1991.

9. The counsel for the appellants/defendants states that since the

appellants/defendants had informed the deceased respondent / plaintiff that

they were, owing to their financial constraint, unable to advance the loan for

which the cheque was given and not to present the cheque, the cheque was

not presented and the deceased respondent / plaintiff presented the same

dishonestly in September/October, 1991, after receiving payments for which

post dated cheques as mentioned in the Dissolution Deed / Agreement dated

31.03.1991 had been issued to him.

10. It has further been enquired from the counsel for the

appellants/defendants as to what was the change in the financial position of

the appellants/defendants between 10th April, 1991 when the cheque was

given and the date when the appellants claim to have reneged from

advancing the friendly loan to the deceased respondent and what was the

date when the appellants/defendants so reneged from giving a friendly loan.

11. The counsel for the appellants/defendants has fairly admitted that

there is no pleading or evidence to the said effect.

12. It has yet further been enquired from the counsel for the

appellants/defendants whether the appellants/defendants have proved the

statement of their bank accounts to show as to how much money was there

in the bank account on 10th April, 1991 when the appellants/defendants

agreed to give a friendly loan and issued the cheque therefor.

13. The counsel states that no such evidence has also been led.

14. Attention of the counsel has been invited to Section 118 of the

Negotiable Instruments Act, 1881 which provides that, until the contrary is

proved, it shall be presumed that every negotiable instrument made or

drawn was for consideration and it has been enquired as to how the

appellants / defendants have rebutted the presumption under the said

provision that the cheque admittedly issued by them was for consideration.

15. The counsel for the appellants/defendants has contended that the

appellants/defendants in their deposition have deposed that the cheque was

not for any consideration but by way of friendly loan and the presumption

thus would rebutted and the onus shifted on the deceased respondent/

plaintiff to show that the said cheque was for the consideration alleged by

the deceased respondent / plaintiff. It is yet further contended that the

deceased respondent / plaintiff having, in the Dissolution Deed/Agreement

dated 31st March, 1991, agreed to the amounts specified therein only being

due to him on account of the erstwhile partnership, was es-stopped from

claiming the sum of Rs.4,40,000/- also to be due on that account. Attention

is drawn to para 3 of the plaint in the suit filed by the deceased respondent /

plaintiff, where the deceased respondent / plaintiff pleaded that "in addition

to the amounts mentioned in the said agreement, another sum of

Rs.4,40,000/- (Rupees Four Lakhs and Forty Thousands only) was found

due and payable to the plaintiff by the defendants." It is argued that after

acknowledging the amounts mentioned in the Dissolution Deed / Agreement

to be in full and final settlement, there could be no scope for pleading any

further liability of the appellants / defendants. Reliance before the Trial

Court in this regard was placed on Section 92 of the Indian Evidence Act,

1872.

16. I am however of the view that the presumption under Section 118

supra, in the facts of the present case, cannot be said to have been rebutted

merely by the appellants/defendants deposing that the cheque admittedly

issued/drawn by them was not for any consideration but was with an intent

to give a friendly loan to the deceased respondent. Giving and taking of a

loan always implies an urgency. As on 10.04.1991 monies were admittedly

due from the appellants / defendants to the respondent / plaintiff. Had the

respondent / plaintiff any urgent need for money and had the appellants /

defendants agreed to on friendly basis to so come to the rescue of the

respondent / plaintiff, the appellants / defendants would have immediately

paid the admitted dues of the respondent / plaintiff for which post dated

cheques had been issued and there was no need for a loan transaction. The

version of the appellants / defendants is thus contrary to the normal human

behaviour. It was thus incumbent upon the appellants/defendants to give

particulars, of the circumstances in which, instead of paying monies

admittedly due to the respondent / plaintiff to enable the respondent /

plaintiff to meet his urgent monetary requirement, loan was agreed to be

given, of the financial constraint which occurred after 10th April, 1991 for

the appellants / defendants to, after agreeing to give, refuse such loan to the

deceased respondent / plaintiff and as to why the cheque issued towards

loan was not taken back. Without the appellants/defendants pleading or

proving so, their version of the cheque having been issued/drawn in

advancement of a loan, cannot be believed. Moreover, if the relations

between the parties were so cordial, so as to the appellants/defendants

immediately on the next date after the issuance of the cheque for loan

communicating to the deceased respondent that they were no longer in a

position to give the loan, the appellants/defendants would have also

collected back the cheque from the deceased respondent / plaintiff. The

factum of the cheque, though dated 10th April, 1991, having been presented

for payment for the first time in September/October, 1991 i.e. when the

period of its validity was nearly over, is indicative of the said cheque being

towards some payment and having been issued to secure that payment. It

also cannot be lost sight of that even for the admitted amounts due from the

appellants/defendants, the deceased respondent / plaintiff did not trust the

mere word of the appellants/defendants that the payments would be made in

instalments on the dates of which the cheques were given but insisted upon

issuance of post dated cheques for the said amount. The same also belies

the version of „friendly‟ loan. It also cannot be lost sight that the cheque

dated 28th September, 1991 for Rs.85,000/-, admittedly issued, was also

dishonoured.

17. The counsel for the deceased respondent / plaintiff has contended that

all the cheques i.e. cheque for Rs.4,40,000/- and the cheques supra under the

Dissolution Deed/Agreement were on the same bank account; that the

appellants/defendants mischievously in or about the month of August, 1991

closed the said account and owing whereto the cheques under the

Agreement also of after that date were dishonoured. He has further

contended that the learned ADJ in the impugned judgment has given cogent

reasons for the claim of the deceased respondent being not barred by

Section 92 of the Evidence act. It is yet further contended that from the

failure of the appellants/defendants to reply to the legal notice preceding the

suit also adverse inference has rightly been drawn by the learned ADJ.

18. The counsel for the appellants/defendants in rejoinder has contended

that the notice preceding the suit was not even proved, though was referred

to by the deceased respondent in his evidence.

19. A perusal of the Trial Court record does not show any office copy of

the notice or of the postal receipt, dispatch thereof or of the AD card of

delivery thereof having been filed, though photocopies are found on record.

The said photocopies also are not found to bear any mark or exhibit.

Though in the examination-in-chief of the deceased respondent, the notice

issued is referred to as Ex.PW1/A but no attempt to prove dispatch or

service thereof even, was made. Thus, the service of the notice cannot be

said to have been proved.

20. I am however otherwise of the view that the learned ADJ on

preponderence of probabilities has taken a reasonable view of the matter and

no ground is found to interfere therewith.

21. I am also not inclined to interfere with the rate of interest awarded by

the learned ADJ for the period prior to the institution of the suit for the

following reasons:

(i) the parties were trade persons and when deposits in

Nationalised Banks have on an average earned rate of interest of 10%

per annum, it is safe to assume that monies invested in business

would yield more than double the said rate, else, it would not be

worthwhile for any trade person to take risks in business;

(ii) the conduct of the appellants/defendants has been found to be

dishonest; they contested the claim for Rs.85,000/- also which now is

admitted to be due. Even after the decree, the said sum of Rs.85,000/-

which is admitted to be due was not tendered;

(iii) even today, the offer given for agreeing to the principal amount

of Rs.4,40,000/- for which cheque was given, was refused; what is

offered is only double of Rs.85,000/-;

(iv) the deceased respondent / plaintiff gave sufficient leeway to the

appellants/defendants before filing the suit but the

appellants/defendants not only during the said time failed to discharge

their liability which is admitted also but attempted to use the litigation

as a tool to coerce the deceased respondent / plaintiff into settling for

an amount lesser than which was admittedly due and has been found

to be due;

(v) unless the Courts in such situations award such compensatory

rate of interest, litigation will continue to be used to defer

payment/loan admitted to be due, with a view to during the pendency

of litigation earn higher returns therefrom.

22. There is no merit in the appeal, which is dismissed with costs.

23. The amount deposited in this Court together with interest accrued

thereon be released forthwith equally in favour of the three legal heirs of the

deceased respondent.

Decree sheet be drawn up.

RAJIV SAHAI ENDLAW, J.

NOVEMBER 21, 2013 bs