Karnataka High Court
Sri. Prashanth Shetty vs M/S. Padma Finance (R) on 19 December, 2023
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RSA No. 1066 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 19TH DAY OF DECEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE ASHOK S.KINAGI
REGULAR SECOND APPEAL NO. 1066 OF 2023 (MON)
BETWEEN:
SRI. PRASHANTH SHETTY
AGED ABOUT 65 YEARS,
S/O LATE K. HONNAYYA SHETTY,
NAVAYUGA PRESS,UDUPI-576210.
...APPELLANT
(BY SRI. NATARAJA BALLAL A, ADVOCATE)
AND:
1. M/S. PADMA FINANCE (R)
BARKUR,
REP BY ITS MANAGING PARTNER
SRI. A.N. KUSHALA SHETTY,
R/A KACHUR VILLAGE,
Digitally signed
by R DEEPA POST BARKUR,
UDUPI TALUK-576210
Location: High
Court of 2. SRI BHASKAR NAYAK
Karnataka AGED ABOUT 61 YEARS,
S/O SANNAYYA NAYAK,
DIAMOND GLASS HOUSE,
VYAVAHA BUILDING,
NOW AT DIAMOND MIRRO HOUSE,
FAMOUS COMMERCIAL COMPLEX,
NEAR CITY BUS STAND,
UDUPI -576210
...RESPONDENTS
(BY SRI. GURURAJ. R., ADVOCATE)
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RSA No. 1066 of 2023
THIS RSA IS FILED UNDER SECTION 100 OF CPC.,
AGAINST THE JUDGMENT AND DECREE DATED 07.03.2023
PASSED IN RA NO.36/2014 ON THE FILE OF THE SENIOR CIVIL
JUDGE, KUNDAPURA, DISMISSING THE APPEAL AND
CONFIRMING THE JUDGMENT AND DECREE DATED 25.08.2014
PASSED IN OS NO.90/2010 ON THE FILE OF THE PRINCIPAL
CIVIL JUDGE AND JMFC, KUNDAPURA.TRIAL COURT DECREED
THE SUIT APPELLATE COURT DISMISSED THE SUIT FOR
RECOVERY OF MONEY.
THIS APPEAL, COMING ON FOR FINAL HEARING, THIS
DAY, THE COURT DELIVERED THE FOLLOWING:
JUDGMENT
This second appeal is filed by the appellant
challenging the judgment and decree dated 07.03.2023,
passed in R.A.No.36/2014 by the Senior Civil Judge,
Kundapura, confirming the judgment and decree dated
25.08.2014, passed in O.S.No.90/2010 by the Principal
Civil Judge & JMFC, Kundapura.
2. For the sake of convenience, parties are referred
to as per their ranking before the trial Court. The
appellant is defendant No.1; respondent No.1 is the
plaintiff; and respondent No.2 is defendant No.2.
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3. The brief facts leading rise to filing of this appeal
are as under:
Plaintiff filed a suit for recovery of money against the
defendants contending that plaintiff is a registered
partnership firm carrying on business of money lending.
Defendant No.1 borrowed a sum of Rs.2,50,000/- on
27.03.2007, promising to repay the same with interest at
16% p.a. He had executed a Demand Promissory Note in
favour of the plaintiff for the said sum. Defendant No.1,
along with defendant No.2 also executed certain other
documents and defendant No.1 failed to repay the said
loan amount. Hence plaintiff got issued a legal notice on
15.02.2010, calling upon the defendants to repay the loan
amount. Defendant No.1 replied to the legal notice
denying the loan transaction. Hence cause of action arose
for the plaintiff to file the suit for recovery of money.
4. Defendant No.1 filed written statement denying
the plaint averments and he has contended that he had
not borrowed loan and the documents in support of the
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plaint were concocted. It is contended that he had
borrowed loan in the year 2000 and he had repaid the loan
amount and at the time of obtaining loan in the year 2000,
the plaintiff obtained signatures on the blank papers and
also blank cheque. The plaintiff had misused the said
blank papers and filed the present suit. It is contended
that no loan had been obtained by defendant No.1 in the
year 2007. On these grounds sought for dismissal of the
suit.
5. The Trial Court, on the basis of the above said
pleadings, framed the following issues:
1) Whether the plaintiff proves that the
defendant No.1 has borrowed a loan of
Rs.2,50,000/- on 27.03.2007 on the co-
obligation of defendant No.2 from the
plaintiff agreeing to repay the same with
interest at the rate of 16% per annum?
2) Whether the plaintiff proves that defendant
are in due a sum of Rs.3,92,941/- as on
the date of suit?
3) Whether the plaintiff is entitled for the
relief sought as claimed in the suit?
4) What order or decree?
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6. In order to prove the case of the plaintiff, the
Managing Partner of the plaintiff was examined as PW-1
and got marked 12 documents as Exs.P1 to P12. In
rebuttal, defendant No.1 examined himself as DW-1 and
got marked 1 document as Ex.D1. The trial Court after
assessing the oral and documentary evidence of the
parties, answered issue Nos.1 to 3 in affirmative and issue
No.4 as per the final order. The trial Court decreed the
suit of the plaintiff with cost. It is decreed that the
plaintiff is entitled for a sum of Rs.3,92,941/- with future
interest at the rate of 16% p.a. and it was further ordered
that the defendants are liable to pay the decree amount to
the plaintiff.
7. The defendants aggrieved by the judgment and
decree passed in the above said suit, filed an appeal in
R.A.No.36/2014. The First Appellate Court, after hearing
the parties, has framed the following points for
consideration:
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1) Whether the impugned judgment of trial
Court calls for any interference and it is
required to be set aside?
2) It so what order?
8. The First Appellate Court, on re-assessing the oral
and documentary evidence, answered point No.1 in
negative and consequently dismissed the appeal filed by
the defendants, confirming the judgment and decree
passed by the trial Court. Defendant No.1, aggrieved by
the judgments and decrees passed by the courts below,
has filed this second appeal.
9. Heard learned counsel for defendant No.1.
10. Learned counsel for defendant No.1 submits that
the Assistant Registrar of Cooperative Societies had issued
an endorsement as per Ex.D1. He submits that the
plaintiff had not complied with the provisions of Section 24
of the Karnataka Money-Lenders Act, 1961 (hereinafter
referred to as 'the Act of 1961' for brevity). He also
submits that the trial Court had not framed issues under
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the provisions of the Act of 1961. He submits that the
defendant No.1 had not obtained any loan in the year
2007 from the plaintiff and plaintiff had got created the
documents by playing fraud on defendant No.1. Hence he
submits that the courts below have committed an error in
not framing issues under the provisions of the Act of 1961
and also committed error in placing reliance on the
documents produced by the plaintiff. He submits that the
judgments and decrees passed by the courts below are
arbitrary, perverse and calls for interference. Hence prays
to allow the appeal.
11. Perused the records and considered the
submissions of learned counsel for defendant No.1.
12. The Managing Partner of the plaintiff-firm was
examined as PW-1. He has reiterated the plaint
averments in his examination-in-chief. He has deposed
that defendant No.1 is the borrower and defendant No.2 is
the guarantor. Further in order establish that defendant
No.1 had obtained loan from the plaintiff-firm in the year
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2007, the plaintiff-firm produced the loan application
submitted by defendants dated 27.03.2007, marked as
Ex.P1, which bears the signatures of defendants No.1
and 2. Ex. P2 is the Demand Promissory note executed by
defendants in favour of the plaintiff. Defendants have also
executed a letter of undertaking on 27.03.2007, marked
as Ex.P3. Ex.P4 is the debit voucher dated 27.03.2007.
Defendants agreed to repay the loan amount. Defendant
No.1 did not repay the loan amount. Plaintiff got issued
legal notice as per Ex.P5, calling upon the defendants to
repay the loan amount with interest. Defendant No.1
issued reply to the legal notice as per Ex.P8, denying the
loan transaction and also denied the execution of
documents in favour of the plaintiff. Ex.P9 is the loan
ledger extract. Ex.P10 is the certified copy of money
lending license for the period from 01.04.2003 to
31.03.2008.
13. From the perusal of the cross-examination of
PW-1, defendants have not denied the signatures
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appearing on Exs.P1 to P4. During the course of cross-
examination, it is suggested to PW-1 that the documents
produced by the plaintiff are concocted and that defendant
No.1 had not obtained loan from the plaintiff in the year
2007. The said suggestion was denied by PW-1. It was
further suggested that plaintiff by playing fraud on
defendant No.1 had concocted the said documents. The
said suggestion was also denied by PW-1.
14. In rebuttal, defendant No.1 was examined as
DW-1. He has reiterated the written statement averments
in the examination-in-chief and produced Ex.D1 which is
the reply given by the Assistant Registrar of Cooperative
Societies informing defendant No.1 that the plaintiff has
not submitted Form No.6.
15. When the defendant alleges that the plaintiff has
played fraud on the defendants, the burden of proof lies
on the defendants to establish that the plaintiff had
obtained the said documents by playing fraud. No such
suggestion was made to PW-1. The plaintiff has produced
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records. Further, if the said documents are concocted,
defendant No.1 has not initiated any criminal action
against the plaintiff. On the contrary, defendant No.1 had
kept quite. Only when the plaintiff got issued legal notice,
defendant No.1 had replied to the said notice denying the
loan transaction. Except denying the loan transaction,
defendant No.1 had not placed any records to establish
that the plaintiff had played fraud on defendant No.1.
Further, defendant No.2 being co-obligant has not filed
any written statement contending that the plaintiff, by
playing fraud on the defendants, concocted the
documents. Defendant No.2 had also not entered into the
witness box. The plaintiff had produced Ex.P10 which
discloses that plaintiff has submitted Form No.6 from
01.04.2003 to 31.03.2008. In rebuttal, defendant No.1
has produced Ex.D1 which is the communication issued by
the Assistant Registrar of Cooperative Societies to the
defendants stating that the plaintiff has not submitted
Form No.6. Further, in order to prove Ex.D1, defendant
No.1 has not examined the author of Ex.D1.
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16. Learned counsel for defendant No.1 submits that
the Court while deciding the claim on merits, has to frame
and decide the issue whether money-lender has complied
with the provisions of Sections 20 and 21 of the Act of
1961. From the perusal of the written statement filed by
defendant No.1, defendant No.1 had not taken any such
contention in the written statement. Further, when the
Court has not framed any such issue, defendant No.1
could have filed any application to frame additional issues,
but the defendant No.1 has not filed an application to
frame additional issues. Mere non-framing of issue i.e.,
issue of fact and issue of law, is not a fatal to the trial of
the suit, unless it has affected disposal on merits. Though
no issue is framed on the law, the parties have adduced
evidence on the fact and discussed before the Court and
the Court decided the point as if there was an issue
framed on it and the decision will not be set aside on the
ground that no issue was framed.
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17. Admittedly, defendant No.1 has not taken a
defence in the written statement that the trial Court has
not framed issues in that regard. The parties having
understood the pleadings, went for trial. Plaintiff has
proved that defendant No.1 has obtained loan from the
plaintiff-firm on 27.03.2007, and defendant No.2 is a co-
obligant to the loan transaction. Both the courts below
were justified in recording a finding that the plaintiff has
proved that defendant No.1 has obtained loan on
27.03.2007, and defendant No.2 is a co-obligant and the
plaintiff has submitted Form No.6 and 7 and the plaintiff-
firm had complied the provisions of the Act of 1961. I do
not find any substantial question of law that arise for
consideration in this appeal and any grounds to interfere
with the impugned judgments and decrees passed by the
courts below.
18. In view of the aforesaid facts and circumstances,
I proceed to pass the following:
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ORDER
The appeal is dismissed.
Consequently, the judgments and decrees
passed by the courts below are confirmed.
No order as to the costs.
In view of dismissal of the appeal,
pending I.As., if any, do not survive for
consideration in this appeal and are accordingly
disposed of.
SD/-
JUDGE
RD
