Sri Pawan Ahuja vs M/S Saravana Alloy Steels Pvt Ltd
2022 Latest Caselaw 89 Kant

      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 4TH DAY OF JANUARY 2022

                          BEFORE

     THE HON'BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY

          REGULAR FIRST APPEAL No.713 OF 2018

BETWEEN:

SRI PAWAN AHUJA,
S/O MAHESH AHUJA,
AGED ABOUT 37 YEARS,
PROP: M/S SUNRISE ENTERPRISES,
NO.560, 6TH MAIN ROAD,
LOWER PALACE ORCHARDS,
BENGALURU-20.
                                              .. APPELLANT
(BY SRI RAMESH CHANDRA FOR
    SMT. K. GEETHA, ADVOCATE)

AND:

1.     M/S SARAVANA ALLOY STEELS
       PVT. LTD.,NO. 22, INDUSTRIAL SUBURB,
       2ND STAGE, YASHWANTHPUR,
       TUMKUR ROAD, BENGALURU-22.
       REPRESENTED BY ITS DIRECTOR,
       MR. SARAVANA.

2.   MR. SHARAVANA,
     DIRECTOR, M/S SARAVANA ALLOY STEELS
     PVT. LTD., AGED ABOUT 43 YEARS,
     R/O NO.680, 9TH CROSS, 2ND STAGE,
     WOC ROAD, BENGALURU-86
                                    .. RESPONDENTS
(BY SRI TARUN A.N.
FOR RESPONDENTS 1 & 2)
                          ****
                                                     RFA.No.713/2018
                                2


      This R.F.A. is filed under Section 96 of Code of Civil
Procedure, praying to set aside judgment and decree passed by
the learned XXXVIII Additional City Civil Judge at Bengaluru
City      (CCH-39),       in      O.S.No.2081/2017      dated
13-03-2018, dismissing the suit of for recovery of money, by
allowing this appeal and etc.,

      This R.F.A. having been heard through Physical
Hearing/Video Conferencing Hearing and reserved on
20.12.2021 at the Principal Bench, Bengaluru and coming on for
pronouncement of Judgment before Dharwad Bench, this day,
the Court delivered the following:

                               JUDGMENT

This is the plaintiff's appeal. The present appellant as a

plaintiff had instituted a suit against the present respondents

arraigning them as defendants in O.S.No.2081/2017

in the Court of learned XXXVIII Additional City Civil & Sessions

Judge at Bengaluru City (hereinafter for brevity referred to as

the 'trial Court') for the relief of recovery of a sum of

`14,11,500/- from them.

2. The summary of the plaint averment in

the trial Court is that the defendant No.1 is a Private Limited

Company and the defendant No.2 is the Director of defendant

No.1 who is incharge of day-today affairs of defendant No.1.

The defendant No.2 as a Director of defendant No.1 approached

the plaintiff and borrowed a sum of `20,00,000/- on the date RFA.No.713/2018

19.04.2013 for their business purpose in Bengaluru City. The

defendants availed the said loan in the form of Account Payee

cheque for a sum of `20,00,000/- drawn on Vijaya Bank,

Ganganagar Branch, Bengaluru which cheque was issued by the

plaintiff. The defendant had agreed to repay the loan amount

together with interest thereupon at the rate of `1.90%

per month. It is the further case of the plaintiff that towards

the repayment of the said loan amount, the defendants have

repaid a sum of `2,00,000/- each on the dates 19.05.2013,

19.06.2013, 19.07.2013, 19.08.2013 and 19.09.2013, in all a

total sum of `10,00,000/-. The defendants have also paid a

sum of `1,98,000/- towards interest in favour of the plaintiff.

However, the defendants failed to pay the balance principal

amount of `10,00,000/- and interest thereupon. It is further

the plaint averment that the defendants have issued three

cheques dated 17.03.2014, 19.03.2014 and 24.03.2014,

totaling to a sum of `10,00,000/- towards the repayment.

However, those cheques were dishonoured when presented for

realisation. The plaintiff made several request for the

repayment of the loan amount, since the defendants did not

repay the loan amount, the plaintiff got issued a legal notice RFA.No.713/2018

dated 01.08.2015, to the defendants. Since the defendants did

not repay the loan amount, the plaintiff was constrained to

institute the suit. With this, the plaintiff has claimed a total

sum of `14,11,500/-, which is inclusive of the principal amount

of `10,00,000/-, the interest amount of a sum of `4,10,000/-,

legal notice charges of `1,000/- and photocopying, typing and

miscellaneous charges of `500/-.

3. Though the suit summons was served upon the

defendant, they did not choose to appear and contest the suit.

4. The plaintiff got himself examined as PW-1 and got

marked documents at Ex.P-1 to Ex.P-7. After hearing, the

arguments addressed before it, the trial Court framed the

following points for consideration:-

1) Whether the plaintiff proves that the defendant No.2, as Director of defendant No.1 has approached him and borrowed loan of `20 lakhs on 09.04.2013 for the business purpose at Bengaluru?

      2)    Whether the plaintiff further proves that the
            defendants      have      availed     or   secured    loan
                                                          RFA.No.713/2018

amount through Account Payee cheque bearing No.064616 on Vijaya Bank, Ganganagar Branch, Bengaluru-32, issued by the plaintiff?

3) Whether the plaintiff further proves that in token of the loan borrowed by the defendants, they have repaid sum of `2 lakhs each on 19.05.2013, 19.06.2013, 19.07.2013, 19.08.2013, 19.09.2013 in all a sum of `10,00,000/- towards principal and a sum of `1,98,000/- towards interest?

4) Whether the plaintiff further proves that the defendants have issued three cheques for repayment of balance principal amount due to the plaintiff of `10 lakhs dated 17.03.2014, 19.03.2014 and 24.03.2014 which were bounced or dishonoured when presented?

5). Whether the plaintiff is entitled to the relief, as prayed for?

6). What order or decree?

5. The trial Court vide its impugned judgment and

decree dated 13.03.2018, while answering Issue Nos.1 to 5 in

the Negative, proceeded to dismiss the suit of the plaintiff.

Being aggrieved by the same, the plaintiff has preferred the

present appeal.

RFA.No.713/2018

6. In response to the notice, the respondents are

being represented by their counsel. The trial Court records

were called for and the same are placed before the Court.

7. Heard the arguments from both sides.

8. Perused the Memorandum of Appeal, impugned

judgment, trial Court records in its entirety and the materials

placed before this Court.

9. In the light of the above, the points that arise for

my consideration are:-

1) Whether the plaintiff has proved that the defendants had borrowed a sum of `20,00,000/- from him on the date 09.04.2013 as a loan agreeing to repay the same with an interest thereupon at the rate of Rs.1.90% per month?

2) Whether the plaintiff proves that as on the date of institution of the suit, the defendants are liable to pay to it jointly and severally a sum of `14,11,500/-?

3) Whether the suit filed by the plaintiff was barred by limitation?

RFA.No.713/2018

4) Whether the judgment and decree under appeal warrants any interference at the hands of this Court?

10. The plaintiff as PW-1 in his examination-in-chief filed

in the form of affidavit evidence has reiterated the contentions

taken up by him in his plaint. In support of his contention that

the defendants had borrowed the loan from him, he has

produced and got marked an on demand Promissory Note dated

19.04.2013, said to have been executed by the defendant No.2

at Ex.P1. He got produced three cheques which are dated

17.03.2014, 19.03.2014 and 24.03.2014 respectively and for a

sum of `4,00,000/-, `3,00,000/- and `3,00,000/- respectively at

Exhibits-P2, P3 and P4. He also got produced a copy of the legal

notice dated 01.08.2015 said to have been sent by him to the

defendants and got it marked at Ex.P5. He produced two postal

acknowledgement cards and two postal receipts at Ex.P6

and Ex.P7 respectively. As already observed, the defendants

since have remained exparte, there was no cross-examination

of PW-1.

11. In the light of the above, it was the argument of

learned counsel for the appellant that even though the evidence

led by the plaintiff both oral and documentary have remained RFA.No.713/2018

undisputed, the trial Court has erroneously dismissed the suit of

the plaintiff observing that the on demand Promissory Note was

not properly stamped. The learned counsel submitted that in

case if stamp duty is not being paid on the Promissory Note at

Ex.P1, the trial Court at the first instance ought to have

impounded the document or imposed penalty calling upon the

plaintiff to pay the stamp duty. Without doing so, after having

allowed the plaintiff to produce the said document and mark it

as an exhibit and admitting the same, now cannot discard the

said document and dismiss the suit. In his support, he relied

upon two reported judgments which would be referred to at a

later stage hereafterwards.

12. Learned counsel for the respondents in his

argument submitted that since there is no whisper about the

alleged on demand Promissory Note in the plaint, the evidence

both oral and documentary led by the plaintiff on the alleged

Promissory Note cannot be considered at all since the said

evidence would have no value in the eye of law. He further

submitted that the suit was barred by limitation, since the

alleged date of loan is on 19.04.2013 and the suit was filed

three years thereafter. As such, the judgment and decree under RFA.No.713/2018

appeal does not warrant any interference at the hands of this

Court.

13. Ex.P-1 is a document shown to be an on demand

Promissory Note, which according to plaintiff, has been

executed by defendant No.2 as a Director of the defendant No.1

Company in favour of an establishment by name M/s Sunrise

Enterprises. The document is dated 19.04.2013 and it shows

that the executant of the document has promised to pay a sum

of `20,00,000/- together with interest thereupon at the rate of

`1.90% per month for the value received under cheque bearing

No.64616 dated 22.04.2013 drawn on Vijaya Bank. The

document is also accompanied in the form of a counterfoil as a

receipt shown to have been executed by the same person.

However, admittedly, the said document is unstamped. It is in

this context, the learned counsel for the appellant submitted

that the trial Court has committed an error by discarding the

said document as an unstamped one and submitted that the

trial Court should have considered regarding the payment of

stamp duty before allowing the party to mark the said

document as an exhibit and admitting it in evidence.

In his support, the learned counsel relied upon a judgment of

the Co-ordinate Bench of this Court in RFA.No.713/2018

Smt. Savithramma R.C -Vs- M/s Vijaya Bank and Another reported

in AIR 2015 KAR 175. In the said case, with respect to Section

33 of the Karnataka Stamp Act, 1957, this Court in paragraph

No.10 of its judgment was pleased to observe that, it should be

borne in mind that once a document is admitted in evidence, it

cannot be called in question thereafter on the ground that it was

not duly stamped. Once the Court admits a document even

wrongly, said admission becomes final and cannot be reopened.

Hence, the need for diligence not only the part of the opposite

counsel but also on the part of the Court, having regard to the

statutory obligation under Section 33 of the Karnataka Stamp

Act, 1957.

In the same judgment, in subsequent paragraph No. 11,

the Court further observed that, if such an objection is not taken

at the time of admitting the said instrument in evidence, and

the insufficiently stamped document is admitted in evidence,

then Section 35 of the Act provides that such admission cannot

be called in question at any stage of the proceeding on the

ground that the instrument has not been duly stamped.

Further, in the same proceeding, the Court further observed

that even while recording the ex parte evidence or while

recording the evidence in the absence of the Counsel for the RFA.No.713/2018

other side, the Court should be vigilant and examine and

ascertain the nature of the document proposed to be marked

and ensure that it is a document which is admissible. The Court

should not depend on objections of the other counsel before

considering whether the document is admissible in evidence or

not. Section 33 of the Stamp Act casts a duty on the Court to

examine the document to find out whether it is duly stamped or

not, irrespective of the fact whether an objection to its marking

is raised or not.

14. In the instant case, though the document at Ex.P-1

was not at all stamped and the document being an on demand

Promissory Note was liable to stamp duty, the trial Court has

permitted the plaintiff not only to present the document in his

evidence, but, also to mark it as evidence without any

observation regarding the non-payment of the stamp duty on

the document or the liability of the presentor to pay the stamp

duty. It did not even proceeded to impound the document or

impose any penalty on that document for not paying the stamp

duty. It is only while writing its judgment, the trial Court

observed that since the stamp duty is not having been paid on

the said document, the same is not acceptable.

RFA.No.713/2018

15. Even, if it is assumed that the trial Court not

considered the aspect of non-payment of a stamp duty on

Ex.P-1, still it has to be seen whether the Promissory Note at

Ex.P-1 and related oral evidence of PW-1 can be considered.

A careful reading of the plaint, would go to show that

nowhere in his plaint, the plaintiff has whispered or stated about

the defendants executing an on demand Promissory Note in his

favour while obtaining the alleged loan from him. As such

absolutely, there is a doubt about the defendants executing the

Promissory Note in favour of the plaintiff, much less, at Ex.P-1.

The plaintiff as PW-1 also has nowhere in his examination-

in-chief has stated about the defendants executing an on

demand Promissory Note in his favour while obtaining the loan.

In paragraph No.8 of his examination-in-chief in the form of

affidavit evidence, the plaintiff has only stated that all the

documents pertaining to suit loan transaction are produced with

the plaint and the same are marked as exhibits by the plaintiff

and the plaintiff's bank statement will be produced in the next

date of hearing. At the end of his examination-in-chief, in a

table showing the alleged exhibits, the plaintiff has shown an on

demand Promissory Note dated 19.04.2013 as a document RFA.No.713/2018

at Ex.P1. Thus, nowhere in his examination-in-chief i.e., in his

evidence in its entirety, the plaintiff has stated about the

defendants executing an on demand Promissory Note while

availing the loan from him. As such, primarily in the absence of

any pleading regarding the defendants executing any

Promissory Note, much less, at Ex.P1 and secondarily in the

absence of the plaintiff not even whispering about the

defendants executing an on demand promissory note in his

examination-in-chief, a mere production of a document calling it

as demand promissory note executed by the defendant No.2

and marking it as a document at Ex.P1 would not make the said

document to consider as a corroborative evidence of the

plaintiff's contention that the defendant had availed a loan from

him a sum of `20,00,000/- on 19.04.2013. It is needless to say

that, any amount of evidence led in the absence of any

pleadings in that regard, does not deserve to be considered.

Therefore, in the absence of pleading by the plaintiff, his oral

evidence, if any, and documentary evidence through exhibits

about the defendants executing an on demand Promissory Note

at Ex.P-1, cannot be considered.

The plaintiff in his evidence as PW-1, though has RFA.No.713/2018

stated that the loan was given on 19.04.2013, but the document

at Ex.P-1 go to show that the consideration under the said

document was received in the form of a cheque dated

22.04.2013. Thus, the post dated cheque, even if it is assumed

that the said cheque was issued by the plaintiff on 19.04.2013,

though would not matter, but what matters is if the loan is given

through cheque, the plaintiff had sufficient materials, more

particularly, the documentary proof like his bank pass book,

statement of account, register, etc., to show the transaction of

loan with the defendants. Admittedly, the plaintiff has not

produced any one of them. As observed above, even though

the plaintiff as PW-1 on his own in his examination-in-chief has

stated that he would produce his bank statement, but he failed

to produce the said bank document. Had really the plaintiff has

paid a loan of `20,00,000/- to the defendants through a cheque

bearing No. 064616 said to have been drawn on Vijaya Bank,

then, nothing had been prevented for the plaintiff from

producing the bank statement to show the debit of the cheque

amount in his account. He was expected to produce the said

document which was in his custody and control and the same

would have acted as an important piece of evidence to prove

the alleged loan transaction. For the reasons best known to RFA.No.713/2018

him, the plaintiff even after himself has voluntarily undertaking

to produce such a bank statement, has not produced the same

for the reasons best known to him. Therefore, an adverse

inference can be drawn to the effect that the contention of the

plaintiff that he had given the loan to the defendant through

cheque, does not appear to be true.

16. According to the plaintiff, the defendant approached

him for a loan amount of `20,00,000/-. Nowhere in his plaint or

in his evidence as PW-1, the plaintiff has stated as to whether

the defendants were known to him. Even according to the

plaintiff, the defendant No.1 is a registered company and the

defendant No.2 is a Director of that Company. The loan amount

is not a smaller sum, it is huge amount of `20,00,000/-.

Therefore, any private man before issuing any loan or while

lending such a huge amount of `20,00,000/-, would ascertain as

to whether the person approaching for a loan, if were to be a

company, has been authorised in a manner known to law, to

avail a loan or any resolution by the Company has been passed

to avail loan etc., Neither any pleading is there in that regard

by the plaintiff nor any evidence in that regard. That also

creates a doubt as to how come a registered company would

approach the plaintiff for a loan of such a huge amount when RFA.No.713/2018

there is no pleading regarding their acquaintance of each other

and also when the plaintiff has not stated that he is a money

lender having license in that regard and has been lending

money to many, including the defendants. This also makes the

alleged loan transaction between the parties a doubtful and

unbelievable.

17. The plaintiff has contended that the defendants

have repaid a total sum of `10,00,000/- out of the loan availed

by them in the form of payment at `2,00,000/- each on five

consecutive months from May 2013 to September 2013.

However, in that regard also, the plaintiff has not stated

whether such an alleged payment was through cash or through

cheque and he has not produced any documents including his

bank account to show the receipt of the partial repayment of

the loan amount by the defendants and encashment of the

cheques, provided, those repayments were made by cheques by

the defendants. When the plaintiff has stated that the loan

given by him to the defendants was through a cheque, it can be

expected that the repayment of the loan by not an individual,

but, by a registered company, of huge amount of `10,00,000/-

would also be through cheques and not by cash. In such an

event, the plaintiff would have necessarily have records RFA.No.713/2018

including his bank account to show the alleged repayment of

the loan, which also the plaintiff was not bothered to produce

for the reasons best known to him. This also makes the

contention of the plaintiff about the loan transaction highly

doubtful one.

18. In response to the arguments of the learned counsel

for the respondents that the suit was hopelessly barred by

limitation, the learned counsel for the appellant in his argument

submitted that the issuance of the cheque at Ex.P-2 to Ex.P-4 by

the defendants have resulted in acknowledgement of debt and

also the extension of limitation. In his support, he relied upon

the judgment of the Full Bench of Gujarat High Court in

Hindustan Apparel Industries V/s Fair Deal Corporation, reported

in AIR 2000 GUJARAT 261. In the said judgment,

with respect to Section 18 of the Limitation Act, 1963, the

Hon'ble Gujarat High Court was pleased to observe that the

payment of cheque which is dishonoured would amount to

acknowledgement of debt and a liability. By necessary

consequence, there will be a saving of limitation as envisaged

by Section 18 of the said Act.

RFA.No.713/2018

No doubt, if it is established that the defendants have

issued the cheque towards repayment of the loan and the same

has been dishonoured when presented for realisation, it could

have been an acknowledgement of debt of a liability. In the

instant case, in view of the fact that the cheques at Exhibits- P2,

P3 and P4, which in total for a sum of `10,00,000/-, is taken to

be as the cheques issued by the defendants to the plaintiff, to

show that those cheques were presented by the plaintiff for

their realisation and the same came to be dishonoured, there

are no evidence except the oral statement of PW-1 to hold that

those cheques were issued by the defendants to the plaintiff

exclusively towards the alleged loan which is the subject matter

of the suit. Since the defendant has remained ex parte, the

plaint averment and the evidence of PW-1 to the extent that the

defendants had issued those three cheques towards the

repayment of alleged loan is taken as an undisputed statement,

still the issuance of those three cheques which is in total for a

sum of `10,00,000/-, would not lead any one, much less, this

Court, to hold that the loan was more amount than the cheque

amount i.e., `20,00,000/-. If the plaintiff intended to prove that

the total loan amount was `20,00,000/-, he was required to

produce some more corroborative evidence, including the RFA.No.713/2018

documentary proof. Since as already observed above, the loan

transaction was with a registered company involving huge

amount. Therefore, the plaintiff not producing the document

including a bank statement and by withholding the same, has

prevented the Court from arriving at a conclusion that the

plaintiff has proved the alleged loan transaction.

19. In addition to the above, it also can be observed

that there is no evidence to show that the plaintiff has

presented these cheques for their realisation to the banker.

According to Section 72 of the Negotiable Instruments Act, a

cheque must, in order to charge the drawer, be presented at the

Bank upon which it is drawn before the relation between the

drawer and the Banker has been altered to the prejudice of the

drawer. Thus, the plaintiff in order to charge the defendants,

who is the drawer of the cheque at the bank, should have

presented the cheque upon which it is drawn. Though the

learned counsel for the appellant submits that a rubber stamp

showing only two words is stamped on the cheque, it cannot be

inferred that those three cheques were presented for realisation

by the plaintiff and they were dishonoured. Since, evenafter,

delivering of the cheques to his collecting banker, the person who is

tendering the cheque for realisation can withdraw those cheques from RFA.No.713/2018

being presented for their realisation to the drawee bank, unless

a cheque return memo is accompanying the cheque, it is not

safe to hold that the cheque was presented and was

dishonoured, by merely relying upon a single sentence

statement made by a witness in that regard. Therefore, in the

absence of any evidence to show that the cheques at Ex.P2 to

Ex.P4 were presented for realisation and the dishonour of the

same by the drawee bank, it cannot be held that the plaintiff as

a payee in the cheque had charged the drawer, as per Section

72 of the Negotiable Instruments Act and consequently, since

he has not presented the cheque and attempted to encash

them, it cannot be held that the defendants have acknowledged

the debt as such, the limitation has been extended under

Section 18 of the Limitation Act. Therefore, when Exhibits-P2 to

P4 do not go to show that the limitation has been extended,

then, even according to the plaintiff, the alleged loan being of

the date 19.04.2013 and admittedly the date of filing the

original suit in the trial Court is on 22.03.2017, which is beyond

three years from the date of arisal of cause of action, the suit is

hopelessly barred by limitation.

RFA.No.713/2018

20. Even though the trial Court for other reasons

dismissed the suit by holding that the plaintiff could not able to

prove the alleged loan transaction, I do not find any reason to

interfere in the finding given by the trial Court in dismissing the

suit of the plaintiff. As such, I proceed to pass the following

order.

ORDER

The Regular First Appeal stands dismissed, as devoid of

merits.

Registry to transmit a copy of this judgment along with

trial Court records to the concerned trial Court without any

delay.

SD/-

JUDGE

mbb