Karnataka High Court

R Subbarao Maney vs B.C. Murthy Kumar on 6 May, 2021

Author: P.Krishna Bhat

                            1
                                           ®
  IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 06TH DAY OF MAY, 2021

                       BEFORE

      THE HON'BLE MR. JUSTICE P. KRISHNA BHAT

     REGULAR FIRST APPEAL No. 2047/2010 (MON)

BETWEEN :

SRI R SUBBARAO MANEY
SINCE DECEASED BY HIS LRS

(1A) SMT. GOWRI BAI
     W/O SUBBA RAO MANEY
     AGED ABOUT 52 YEARS

(1B) DATHATREYA RAO MANEY
     S/O R. SUBBA RAO MANEY
     AGED ABOUT 31 YEARS

(1C) HARAHARI RAO MANEY
     S/O R. SUBBA RAO MANEY
     AGED ABOUT 29 YEARS

     ALL ARE RESIDING AT NO.50/51
     SBI LAYOUT, 4TH B CROSS
     MARAGONDANA HALLI ROAD
     ANANDAPURA, K.R.PURAM,
     BANGALORE-560 036.
                                        ...APPELLANTS

(BY SRI JANARDHANA G., ADVOCATE FOR A1(A-C))
                                2




AND:

SRI B.C. MURTHY KUMAR
ALSO FORMERLY CALLED C.D. MURTHY
FATHERS NAME NOT KNOWN TO PLAINTIFF
WORKING AS CLERK (COIN NOTE EXAMINER)
ESTABLISHMENT DEPARTMENT,
RESERVE BANK OF INDIA,
NRUPATUNGA ROAD
BANGALORE-560 001.
                                                ...RESPONDENT

(BY SRI MOHAMED KHAN A., ADVOCATE)


     THIS REGULAR FIRST APPEAL IS FILED UNDER SECTION
96 READ WITH ORDER 41 OF CPC, AGAINST THE JUDGMENT
AND DECREE DATED 11.11.2010 PASSED IN O.S.15279/2004
ON THE FILE OF THE XXVI-ADDL. CITY CIVIL JUDGE, MAYO
HALL, BANGALORE, DISMISSING THE SUIT FOR RECOVERY OF
MONEY.

     THIS REGULAR FIRST APPEAL HAVING BEEN HEARD
AND RESERVED ON 30.03.2021, COMING ON 'FOR
PRONOUNCEMENT OF JUDGMENT', THIS DAY, THE COURT
DELIVERED THE FOLLOWING:


                      JUDGMENT

The judgment of the learned XXVI Additional City

Civil and Sessions Judge at Mayo Hall, Bangalore (CCH 20)

dated 11.11.2010 in O.S.No.15279/2004 dismissing the

suit of the plaintiff is under challenge in this appeal.

2. The plaintiff is the appellant herein. Defendant is

the respondent. Parties shall be referred to during the

course of this judgment as per their ranks before the Court

below. During the pendency of this appeal, plaintiff died

and his LRs have come on record.

3. The plaintiff instituted O.S.No.15279/2004

against the defendant before the Court below for recovery of

a sum of Rs.4,00,170/- with interest at the rate of 12% p.a.

from the date of filing the suit till the date of realization and

costs. It is the case of the plaintiff and the defendant that

they were both employees of Reserve Bank of India,

Bangalore Branch and they knew each other. It is the case

of the plaintiff that defendant was running Chits Group.

The plaintiff joined three such groups namely, two chits of

Rs.1,00,000/- each for 20 months with 20 members with

each member contributing Rs.5,000/- per month, both

beginning from December, 2000 and another for

Rs.3,00,000/- of 20 members for 20 months with each

member contributing Rs.15,000/- per month beginning

from July, 2001. Accordingly, plaintiff started to pay the

chit amounts in respect of all the three chit groups to the

defendant through cheques drawn on RBI Employees Co-

operative Bank Ltd., N.T. Road, Bangalore, and he has

furnished the details of the same in the plaint. Briefly put,

it is his case that he had issued 14 cheques to the

defendant on various dates towards subscription payments

and on five occasions he had made payments by cash.

According to him, he had in all paid Rs.3,39,170/- to the

defendant towards subscription of the three chit groups. It

was his further case that defendant did not repay the

amount and therefore he was liable to pay the amount

with interest thereon at 12% p.a. from the date of the suit

till the date of realization with costs.

4. The defendant filed his written statement denying

the averments in the plaint and contending that as an

employee of Reserve Bank of India it was illegal for him to

run any Chit Groups and in fact he was not running any

such chit groups and plaintiff did not make payment to him

either through cheques or in cash as alleged by him in the

plaint and therefore, there was no question of defendant

being due in any amount as alleged in the plaint to the

plaintiff. The defendant contended that he had paid

Rs.2,49,200/- to the plaintiff on different dates and further

he had also given Rs.90,000/- by way of cheque on

26.07.2001 and Rs.9,500/- on 08.08.2002 by cheque. It

was the contention of the defendant that plaintiff had

returned the amount received by him in cash from the

defendant through various cheques. It was specifically

contended by the defendant in the written statement that

plaintiff used to receive the money from the defendant in

cash and he was returning the same to the defendant

through cheques with an ulterior motive to show the same

in the income tax statement.

5. On the said pleadings, the trial Court framed the

following issues :

"1. Whether plaintiff proves that he had paid Rs.3,39,170/- on various dates towards monthly installments of 3 chits group conducted by defendant?

2. Whether defendant proves that plaintiff used to borrow money in cash from him and returned the same through cheques?

3. Whether defendant proves that he had paid Rs.90,000/- on 26/7/2001 and Rs.9,500/- on 8/2/2002 to plaintiff?

4. Whether the suit of plaintiff is barred by time?

5. Whether plaintiff is entitled for interest at the rate of Rs.12% p.a.?

6. Whether plaintiff is entitled for the relief's claimed in the plaint?

7. What decree or order?"

6. The plaintiff examined himself as P.W.1 and got

marked Ex.P.1 which was the statement of his Bank

account. Defendant examined himself as D.W.1 and he got

examined Ex.D.1 which is the statement of his Bank

account.

7. The learned trial Judge on appreciation of the

evidence has held that plaintiff has failed to prove his case

and it was merely oath against oath and accordingly the

suit was dismissed with costs.

8. Learned counsel Sri. Janardhana G. appearing for

the plaintiff submitted before me that learned trial Court

has committed an error in dismissing the suit. He

submitted that plaintiff has no doubt contended that

defendant was running chit groups and he was making

payment to the same by way of subscription and on

fourteen occasions he had issued cheques and on five

occasions he had made payment through cash. He

submitted that the trial Court has failed to notice that

plaintiff has produced Ex.P.1 which showed that a sum of

Rs.2,49,200/- was paid by the plaintiff to the defendant

through fourteen cheques and defendant has not explained

as to in what manner he had repaid the same to the

plaintiff. He also contended that the defendant's denial in

the written statement is evasive and he has admitted in the

written statement as well as in his evidence that he has

received Rs.2,49,200/- from the plaintiff. In his evidence

he has admitted that he has not returned the same to the

plaintiff. According to the learned counsel, the trial Court

has completely overlooked this material aspect of the

evidence and dismissed the suit and therefore the suit is

liable to be decreed by allowing the appeal.

9. Learned counsel Sri. Mohamed Khan A. appearing

for the defendant submitted that learned Court below on

appreciation of the pleadings and the evidence placed

before it has come to the right conclusion and has

dismissed the suit. According to the learned counsel,

plaintiff has completely failed to prove that defendant was

running three chit groups as pleaded by him and therefore

his further contention that he had made payments as

pleaded by him in the plaint to the defendant cannot be

accepted. He further submitted that plaintiff had borrowed

money from the defendant in cash and thereafter he had

returned the same by way of fourteen cheques, in all

amounting to Rs.2,49,200/- to the defendant. He

submitted that, as pleaded by the defendant in the written

statement, he has demonstrated it by producing Ex.D.1,

the Bank account extract that defendant himself had paid

Rs.90,000/- plus Rs.9,500/- by way of two cheques to the

plaintiff and accordingly, the trial Court was right in

dismissing the suit and therefore, there is no merit in the

appeal and it is liable to be dismissed.

10. Careful perusal of the pleadings show that

plaintiff and defendant were both employees of Reserve

Bank of India, Bangalore Branch and they knew each other

and plaintiff had paid to the defendant Rs.2,49,200/- by

way of fourteen cheques between 09.12.2000 and

18.06.2002. Plaintiff has, in addition, contended that on

five occasions he had made payment to the defendant by

way of cash and therefore defendant was liable to pay him a

total sum of Rs.3,39,170/- towards the principal amount

and interest thereon at 12% p.a. from the date of payment

till the date of realization.

11. Defendant in his pleadings totally denied the fact

that he was running chit groups and he has contended that

as an employee of Reserve Bank of India, he was bound by

the rules and it was not permissible for him to run any Chit

Groups. In so far as the money transaction is concerned,

defendant does not altogether deny the monetary

transaction between the plaintiff and himself, but his

explanation is that on account of income tax issues,

plaintiff was insisting the defendant to make monetary

advances to him by way of cash and he was returning the

same by way of cheque. He has therefore contended that

the amount of Rs.2,49,200/- given by the plaintiff to

himself through cheques was actually towards repayment

of the loans already taken by him.

12. It is necessary for the purpose of understanding

the dispute to make reference to the pleadings themselves.

The crux of the case of the plaintiff appears in para 3 of the

plaint and it reads as follows :

"3. The plaintiff and the defendant have been working together in Reserve Bank of India, Bangalore Branch, for the last several years and at the request of the defendant the plaintiff has joined 3 chits group conducted by him. The first chit was of 20 members of 20 months each to contribute 15,000 and the chit amount is Rs.3 lakhs starting from July 2001.

The second chit was Rs.1 lakh for 20 months for 20 members each member contribute Rs.5,000 and the third chit was Rs.1 lakh for 20 months for 20 members each member to

contribute 5,000/- per month and in all three chits the chit amount will be paid subject to deduction of dividend amount distributed out of the bid amount, 1 lakh chits in two groups have been started in the month of December 2000. The plaintiff accordingly started to pay the chit amount of all the 3 chits amounts together through cheques drawn on RBI Employees Co-operative Bank Limited, N.T.Road, Bangalore and the details are as under. The defendant has furnished zerox copy of the terms of the payment and the particulars of the chit amount paid by the plaintiff to the defendant are hereunder:

Date             Cheque No.             Amount
                                            Rs.
9.12.2000        MO61006                10,000
9.1.2001         Cash                   14,000
10.2.2001        MO 66721               14,000
15.3.2001        MO 68436               18,500
12.4.2001        MO 69164               12,800
14.5.2001        MO 69168               12,800
12.6.2001        MO 72165               12,900
9.7.2001         Cash                   15,000
14.8.2001        MO 78902               18,000
9.9.2001         Cash                   19,000





       13.10.2001      MO 8198                  19,270
       9.11.2001       Cash                     20,000
       12.12.2001      MO 54702                 20,000
       16.1.2002       MO 54719                 20,550
       20.2.2002       MO 156085                21,250
       9.3.2002        Cash                     21,250
       20.4.2002       MO 156099                22,800
       16.5.2002       M 159605                 23,400
       18.6.2002       M 159616                 23,650
                              Total           3,39,170

       (All the cheques drawn on RBI
       Employees Cooperative Bank Ltd.,
       NT Road, Bangalore.

       Interest at 12% per annum from
      18.6.2002 to January 2004                 61,000
                                              4,00,170"

13. In regard to the same, the stand of the

defendant is articulated at paras 4, 5, 7 and 10 of the

written statement and it reads as follows :

"4. The defendant submits that, he was not running any chits as stated by the plaintiff and has not received the amount as stated in para No.3 of the plaint. When the defendant is not running any chit, the question of making payment to the plaintiff does not arise at all.

The other averments made in the para No.3 of the plaint are hereby denied as false and frivolous. It is totally false to state that the plaintiff has changed as D.C.Murthy Kumar and given the same to Reserve Bank of India and drawing the salary in the said name. It is totally false to state that the defendant has changed the name to avoid the creditors.

5. Defendant denies that account statement produced by the plaintiff for having paid Rs.2,49,200/- and it is also denied that 5 payment made in cash at the request of the defendant and the other averment made in the said para is also denied herewith. The defendant has paid the sum of Rs.2,49,200/- to the plaintiff in different date and also a sum of Rs.90,000/- by way of cheque on 26.07.2001 and Rs.9,500/- on 08.08.2002. The said amount of Rs.2,49,200/- paid by the defendant to the plaintiff, has been returned by the plaintiff by way of cheque as mentioned in Para No.3 of the plaint.

      6. xxxxxx





      7. This     defendant submits        that    the

plaintiff use to receive the money from the defendant in cash and the said amount has been returned to the defendant by the plaintiff by way of cheque with an ulterior motive to show the same before the Income Tax. The plaintiff always used to receive the amount in cash and used to pay through cheque. It is submitted that this defendant was not running any chit and the plaintiff has not paid the said amount towards the chit amount. Hence, the question of withholding the amount and payment of interest does not arise at all.


      8. xxxxx
      9. xxxxx

      10.   Without   prejudice      to   the   above

contention the defendant submits that he has paid a sum of Rs.90,000/- by way of cheque on 26.07.2001 and Rs.9,500/- on 08.08.2002 to the plaintiff and several amounts by way of cash to plaintiff by withdrawing the same from the defendant's account."

(Emphasis Supplied)

14. A close reading of the above clearly shows that

even though the defendant has denied running chit groups

and further, receiving any amount from the plaintiff by way

of subscription to the chit groups, he has not at all denied

monetary transaction between himself and the plaintiff. On

the other hand, the evident stand of the defendant is that

they were having money transaction and plaintiff had

borrowed Rs.2,49,200/- on various occasions by way of

cash and on the other hand he had repaid the same

through fourteen cheques in order to show the same in his

Income Tax statement. He has also taken a definite stand

that in addition to advancing Rs.2,49,200/- to the plaintiff,

he had also advanced Rs.90,000/- plus Rs. 9,500/- on two

occasions through cheques, and several of his cash

advances to plaintiff was by withdrawing the same from his

account.

15. Perusal of the evidence of P.W.1 and D.W.1

clearly shows that contrary to the perception of the learned

Court below, it is not a mere case of oath against oath, but,

apart from fourteen transactions being reflected in Ex.P.1

pointing to a particular pattern supporting the broad case

of the plaintiff, there is, more significantly, a specific

admission of D.W.1 in his cross examination. The relevant

portion of the evidence of D.W.1 reads as follows :

"¤±Á£ÀÉ ¦ 1 gÀ°è £ÀªÀÄÆ¢¹zÀAvÀÉ ºÀt £À£Àß SÁvÀÉUÀÉ dªÀiÁ DVvÀÄÛ CAzÀgÀÉ ¤d. ªÁ¢¬ÄAzÀ £À£Àß SÁvÀÉUÀÉ MlÄÖ gÀÆ.2,48,920 ªÀUÁðªÀuÉ DV dªÀiÁ DVgÀ§ºÀÅzÀÄ CAzÀgÀÉ EgÀ§ºÀÅzÀÄ. £Á£ÀÄ ºÀtªÀ£ÀÄß ªÁ¢UÀÉ ªÀÄgÀ½PÀÉÆnÖ®è CAzÀgÀÉ ¤d."

16. In view of the entries in Ex.P.1 which is admitted

by D.W.1, it is clear that the amount appearing in the

deposition of D.W.1 is a small typographical error, namely

it is shown therein as Rs.2,48,920/-, whereas the correct

sum is Rs.2,49,200/-. D.W.1 has clearly admitted that he

had received the amount reflected in Ex.P.1 which amounts

to Rs.2,49,200/- through fourteen cheques as pleaded by

the plaintiff in his plaint and he did not repay it to him.

17. It is necessary now to advert to the stand taken

by the defendant in his written statement, albeit, by styling

it as "without prejudice" at para 10 which is already

extracted herein above. The precise stand of the defendant

was that he had paid "several amounts by way of cash to

plaintiff by withdrawing the same from the defendant's

account". If that is so, defendant has not produced the

account extract statement to demonstrate the aspect that

he had made such payment to the plaintiff by withdrawing

the amount from his account. It is necessary to notice that

it is not as if defendant has not produced any document

during the course of the trial at all. He has in fact

produced Ex.D.1 account statement extract; but the

defendant has not at all proved any such withdrawal

totalling to Rs.2,49,200/-, which, as per his claim, he had

withdrawn from the account and made over to the plaintiff.

On the other hand, Ex.D.1 only reflects the payment made

by him to the plaintiff by way of cheque on two occasions,

namely Rs.90,000/- plus Rs.9,500/-. The learned trial

Judge has overlooked the cumulative effect of the above

pleadings, documents produced and the admission made

by the defendant, as noticed herein above, that plaintiff had

paid Rs.2,49,200/- to the defendant, and he, in his turn,

had returned only Rs.99,500/-. Therefore, learned Court

below was not justified in throwing out the suit, lock, stock

and barrel, without appreciating this aspect of the evidence

placed on record.

18. Learned counsel for the defendant Sri. Mohamed

Khan no doubt contended before me that the plaintiff is not

entitled to any relief in the suit as instituted by him, in as

much as, it was his definite case that he had made

payments to the defendant towards subscription to three

chit groups and even though he had claimed that he had

records to prove the factum of running of Chit Groups, he

had not produced such documents before the Court. His

precise submission is that, when he came to the Court with

a definite pleading that there was chit transaction, he is not

entitled to digress, depart and shift from the same and take

up a contention that there was money transaction

simplicitor, and in the said transaction, he had paid

Rs.2,49,200/- and shift the case on to an entirely different

footing and obtain decree from the Court. According to the

learned counsel, this will cause prejudice to the defendant

and therefore, plaintiff is not entitled to any relief in the

suit.

19. There is no doubt about the fact that plaintiff

has clearly contended that defendant was running chit

groups and the amount paid by the plaintiff to the

defendant was towards contribution to the same by way of

subscription. The question now is, whether by accepting

the case of the plaintiff as contended by his learned counsel

that he had in all paid Rs.2,49,200/- to the defendant and

defendant had only returned Rs.99,500/- and therefore, he

was entitled to a decree for Rs.1,49,700/-, any prejudice is

caused to the defendant? Whether the defendant was not

aware of the basic feature of the case as propounded in the

plaint? Whether in law the defendant will not be imputed

with the full knowledge of the substratum of the case of the

plaintiff that defendant owed him at least Rs.1,49,700/-

especially when it derives support from the pleadings of the

rival parties, namely, at para 3 of the plaint and paras 4, 5,

7, and 10 of his own written statement ? Answers to the

above will emerge if the portions of the pleadings as

indicated herein above is juxtaposed with the admission of

DW.1 as extracted herein above, clearly suggesting that

submissions of learned counsel for the defendant is at best

an exercise in 'hairsplitting' and at worst a 'sophistry'.

And, courts cannot encourage the same. Courts are not

places for tripping up parties merely because they have, for

reasons best known to them, given a garish 'top dressing'

to their cases or there is some 'terminological

inexactitude' on aspects which are peripheral. The

objection as raised by Sri.Khan relates to the 'form' of the

pleadings, namely whether the money transaction alleged

between the parties is on account of formation of chits

group by defendant or it was a money transaction

simplicitor. Taking an overall view of the case - pleadings

on both sides, evidence and E.x.P.1 and E.x.D.1. - it is

clear that the chits group is only the 'form' of the case and

money transaction is the 'substance' of the case. When

'form' is pitted against the 'substance' in a case, what is of

material importance is that whether parties and in this

particular case, the defendant was in any manner misled in

'joining issues' with plaintiff in meeting his case. That

defendant did not suffer any 'disability' or 'prejudice' in this

case is evident from the written statement filed by him as

extracted in the preceding paras of this judgment and also

the admissions made by him.

20. This takes me to the meaning and significance

of the pleadings themselves.

"23. The said aspect can be looked from another angle. Rules 3, 4 and 5 of Order 8 form

an integral code dealing with the manner in which allegations of fact in the plaint should be traversed and the legal consequences flowing from its non-compliance. It is obligatory on the part of the defendant to specifically deal with each allegation in the plaint and when the defendant denies any such fact, he must not do so evasively but answer the point of substance. It is clearly postulated therein that it shall not be sufficient for a defendant to deny generally the grounds alleged by the plaintiffs but he must be specific with each allegation of fact (se Badat and Co. v. East India Trading Co.)

24. Rule 4 stipulates that a defendant must not evasively answer the point of substance. It is alleged that if he receives a certain sum of money, it shall not be sufficient to deny that he received that particular amount, but he must deny that he received that sum or any part thereof, or else set out how much he received, and that if an allegation is made with diverse circumstances, it shall not be sufficient to deny it along with those circumstances. Rule 5 deals with specific denial and clearly lays down that every allegation of fact in the plaint, if not denied specifically or by

necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted against him."

"27. Another aspect which impressed the High Court was the variance in the pleadings in the plaint and the evidence adduced by the plaintiffs. ......... In our considered view, such a variance does not remotely cause prejudice to the defendant. That apart, it does not take him by any kind of surprise. In Celina Coelho Pereira v. Ulhas Mahabaleshwar Kholkar [(2010) 1 SCC 217 : (2010) 1 SCC (Civ) 69] the High Court had non-suited the landlord on the ground that he had not pleaded that the business of the firm was conducted by its partners, but by two other persons and that the tenant had parted with the premises by sub-letting them to the said two persons under the garb of deed of partnership by constituting a bogus firm. This Court observed that there is substantial pleading to that effect. The true test, the two-Judge Bench observed, was whether the other side has been taken by surprise or prejudice has been caused to him. In all circumstances, it cannot be said that because of

variance between pleading and proof, the rule of secundum allegata et probata would be strictly applicable. In the present case, we are inclined to hold that it cannot be said that the evidence is not in line with the pleading and in total variance with it or there is virtual contradiction. Thus, the finding returned by the High Court on this score is unacceptable." (Emphasis supplied) [vide GIAN CHAND & BROTHERS AND ANOTHER v. RATTAN LAL, ALIAS RATTAN SINGH, (2013) 2 SUPREME COURT CASES 606]

21. Further, "15. The relevant principle relating to circumstances in which the deficiency in, or absence of, pleadings could be ignored, was stated by a Constitution Bench of this Court in Bhagwati Prasad v. Chandramaul [AIR 1966 SC 735] : (AIR p. 738, para 10) "10. ... If a plea is not specifically made and yet it is covered by an issue by implication, and the parties knew that the said plea was involved in the trial, then the mere fact that the plea was not expressly taken in the pleadings would not necessarily disentitle a party from relying upon it

if it is satisfactorily proved by evidence. The general rule no doubt is that the relief should be founded on pleadings made by the parties. But where the substantial matters relating to the title of both parties to the suit are touched, though indirectly or even obscurely, in the issues, and evidence has been led about them, then the argument that a particular matter was not expressly taken in the pleadings would be purely formal and technical and cannot succeed in every case. What the Court has to consider in dealing with such an objection is: did the parties know that the matter in question was involved in the trial, and did they lead evidence about it? If it appears that the parties did not know that the matter was in issue at the trial and one of them has had no opportunity to lead evidence in respect of it, that undoubtedly would be a different matter. To allow one party to rely upon a matter in respect of which the other party did not lead evidence and has had no opportunity to lead evidence, would introduce considerations of prejudice, and in doing justice to one party, the Court cannot do injustice to another."

(Emphasis supplied)

16. The principle was reiterated by this Court in Ram Sarup Gupta v. Bishun Narain Inter College [(1987) 2 SCC 555 : AIR 1987 SC 1242] : (SCC pp. 562-63, para 6) "6. ... It is well settled that in the absence of pleading, evidence, if any, produced by the parties cannot be considered. It is also equally settled that no party should be permitted to travel beyond its pleading and that all necessary and material facts should be pleaded by the party in support of the case set up by it. The object and purpose of pleading is to enable the adversary party to know the case it has to meet. In order to have a fair trial it is imperative that the party should settle the essential material facts so that other party may not be taken by surprise. The pleadings however should receive a liberal construction; no pedantic approach should be adopted to defeat justice on hair-splitting technicalities. Sometimes, pleadings are expressed in words which may not expressly make out a case in accordance with strict interpretation of law. In such a case it is the duty of the court to ascertain the substance of the pleadings to determine the question. It is not

desirable to place undue emphasis on form, instead the substance of the pleadings should be considered. Whenever the question about lack of pleading is raised the enquiry should not be so much about the form of the pleadings; instead the court must find out whether in substance the parties knew the case and the issues upon which they went to trial. Once it is found that in spite of deficiency in the pleadings parties knew the case and they proceeded to trial on those issues by producing evidence, in that event it would not be open to a party to raise the question of absence of pleadings in appeal."

(Emphasis supplied)

17. It is thus clear that a case not specifically pleaded can be considered by the court only where the pleadings in substance, though not in specific terms, contain the necessary averments to make out a particular case and the issues framed also generally cover the question involved and the parties proceed on the basis that such case was at issue and had led evidence thereon. As the very requirements indicate, this should be only in exceptional cases where the court is fully satisfied

that the pleadings and issues generally cover the case subsequently put forward and that the parties being conscious of the issue, had led evidence on such issue. But where the court is not satisfied that such case was at issue, the question of resorting to the exception to the general rule does not arise. The principles laid down in Bhagwati Prasad [AIR 1966 SC 735] and Ram Sarup Gupta [(1987) 2 SCC 555 : AIR 1987 SC 1242] referred to above and several other decisions of this Court following the same cannot be construed as diluting the well-settled principle that without pleadings and issues, evidence cannot be considered to make out a new case which is not pleaded. Another aspect to be noticed, is that the court can consider such a case not specifically pleaded, only when one of the parties raises the same at the stage of arguments by contending that the pleadings and issues are sufficient to make out a particular case and that the parties proceeded on that basis and had led evidence on that case. Where neither party puts forth such a contention, the court cannot obviously make out such a case not pleaded, suo motu.

[Emphasis supplied]

[vide :Bachhaj Nahar vs. Nilima Mandal and another, (2008) 17 Supreme Court Cases 491]

22. Now, in the backdrop of the law enunciated by

the Hon'ble Supreme Court, could it be said, as contended

by Sri. Khan, learned counsel, that defendant was

"prejudiced" in this case ? Now, the "prejudice" is a

question of fact particular to each case. There cannot be a

general and omnibus rule regarding what causes

"prejudice" to a defendant in individual cases. Does the

law - and in this particular case C.P.C. - "require a magic

incantation which can only be expressed in a set formula

of words. What we have to see is whether the substance of

the requirements is there". Coming back to this case,

grievance made out is, since the suit claim is founded on

chit transaction and that chit transaction not having been

proved, Court should not find a new case on the basis of

money transaction and grant relief on the said basis. The

question really is one of how the parties have understood

the rival case ? "The Civil Procedure Code is an elaborate

codification of the principles of natural justice to be

applied to civil litigation". [per R.V. Raveendran, J, para

11, (2008) 17 SCC 491]. In this case parties have

completely understood the nature of the transaction, more

particularly the defendant. Plaintiff has furnished the

details of payment made by him to defendant in his

pleadings; defendant has filed his written statement,

parties have gone to trial fully on that basis, produced

their bank account extracts as already discussed and,

therefore, it cannot be said that defendant has suffered

any "prejudice" or was "taken by surprise" on account of

variance in the nature of transaction made out during the

trial. Objection, therefore, is only one of 'form' and not of

'substance' and accordingly, deserves to be rejected.

23. Next question that requires to be considered is

the effect of para 10 of the written statement which is

hedged by "without prejudice" and therefore can the

defendant wriggle out of certain statements made

regarding mode of payment to plaintiff claimed by him ?

Authorities on the subject clearly say 'no'. He is bound by

the said statement. "Without prejudice rule" offers him no

asylum.

24. "Without prejudice rule" is a rule of hoary

lineage. Eminent law Lords have pronounced on this

vexed rule often with a tone of exasperation. But if there

was unanimity on any one aspect among them, it is this

that the rule is based on sound public policy and the

salutary object underlying this rule is to encourage and

facilitate parties to seek negotiated settlement of disputes

without recourse to Court and unless some protection is

given to the parties for stating their mutual position they

will be inhibited from placing their cards on the table lest

what they have disclosed during negotiation might be used

against them as evidence. "The guiding principle is that

parties should be encouraged so far as possible to resolve

their dispute without resort to litigation, and that they

should not be discouraged by the knowledge that anything

that is said in the course of such negotiations may be used

to their prejudice in the course of proceedings". [Lord Hope

of Craighead, at para 24, Bradford & Bingley v. Rashid

(2006) All.E.R. 705]

25. It can, therefore, be taken as fairly well settled

that "without prejudice rule" is a part of public policy and

the same is sanctified almost to a rule of law to encourage

negotiated settlements of legal disputes and, therefore, its

applicability is limited to the stage before parties knock at

the doors of the Court. Even during the negotiation stage

before the litigation commences, the judicial opinions have

been divergent on the extent of applicability of this rule.

English authorities referred to in Bradford & Bingley case

(2006) All.E.R. 705 have sometimes taken the view that if

a clear statement is made during the course of negotiations

even after prefacing such statements as "without

prejudice" such clear statements are not afforded the

beneficial protection under the said rule. It may be added

that the decision of the House of Lords in Bradford &

Bingley case has been approvingly quoted by the Hon'ble

Supreme Court in ITC Limited v. Blue Coast Hotels Ltd.

(2018) 15 SCC 99.

26. Says Hon'ble Supreme Court :

"33. Much was sought to be made of the words "without prejudice" in the letter containing the undertaking that if the debt was not paid, the creditor could take over the secured assets. The submission on behalf of the debtor that the letter of undertaking was given in the course of negotiations and cannot be held to be an evidence of the acknowledgement of liability of the debtor, apart from being untenable in law, reiterates the attempt to evade liability and must be rejected. The submission that the letter was written without prejudice to the legal rights and remedies available under any law and therefore the acknowledgement or the undertaking has no legal effect must likewise be rejected. This letter is reminiscent of a letter

that fell for consideration in Spencer's case as pointed out by Mr. Harish Salve,

"as a rule the debtor who writes such letters has no intention to bind himself further than is bound already, no intention of paying so long as he can avoid payment, and nothing before his mind but a desire, somehow or other, to gain time and avert pressure."

It was argued in a subsequent case that an acknowledgment made "without prejudice" in the case of negotiations cannot be used as evidence of anything expressly or impliedly admitted. The House of Lords observed as follows: (WLR p. 2072, para 16)

"16. .... But when a statement is used as acknowledgement for the purpose of s. 29 (5), it is not being used as evidence of anything. The statement is not an evidence of an acknowledgement. It is the acknowledgement." Therefore, the "without prejudices" rule could have no application. It said: (WLR p 2091, para

83)

"83. Here, the [respondent], Mr. Rashid was not offering any concession. On the contrary, he was seeking one in respect of an undisputed debt. Neither an offer of payment nor actual payment....."

We, thus, find that the mere introduction of the words "without prejudice" have no significance and the debtor clearly acknowledged the debt even after action was initiated under the Act and even after payment of a smaller sum, the debtor has consistently refused to pay up".

27. In this case, the statement made by the

defendant at para 10 of the written statement about his

having withdrawn amounts from his Bank account and

thereafter having made such payments to the plaintiff on

numerous occasions is not during the course of

negotiations, but it is after the litigation has commenced

and in the written statement filed by him in response to

the suit claim. It is therefore clear that the said portion of

the statement made by the defendant cannot get the

beneficial protection under the "without prejudice rule"

and as already noticed, the defendant has not produced

any semblance of proof to support the said contention. In