Madhya Pradesh High Court
M/S Ak.Enterprises vs Manoharlal on 31 October, 2023
Author: Pranay Verma
1
IN THE HIGH COURT OF MADHYA PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE PRANAY VERMA
FIRST APPEAL No. 313 of 2001
BETWEEN:-
M/S AK.ENTERPRISES, PROPRIETORSHIP
CONCERN THROUGH PROPRIETOR ASHOK
KUMAR S/O GULJARILALJI CHAUDHARY,
R/O CHIMANGANJ MANDI, UJJAIN (MADHYA
PRADESH)
.....APPELLANT
(BY SHRI YOGESH MITTAL - ADVOCATE)
AND
MANOHARLAL S/O MADANLAL
CHAURASIYA, AGE 48 YEARS, OCCUPATION
BUSINESS, R/O PANDARIBA, UJJAIN.
(MADHYA PRADESH)
.....RESPONDENT
(BY SHYRI S.I. ANSARI - ADVOCATE)
.................................................................................................................
Reserved on : 06.07.2023
Pronounced on : 31.10.2023
................................................................................................................
This appeal having been heard and reserved for judgment,
coming on for pronouncement this day, the court passed the following:
JUDGMENT
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
1. This appeal under Section 96 of the CPC has been preferred by
the defendant being aggrieved by the judgment and decree dated
16.02.2001 passed in Civil Suit No.9-B/1995 by the VIth Additional
District Judge, District Ujjain whereby the claim of plaintiff has been
decreed in the sum of Rs.44,660/- along with interest at the rate of 6%
per annum from the date of suit till date of realization.
2. As per the plaintiff, the proprietor of the defendant Ashok Kumar
Chaudhary was in need of money for his business. He hence obtained
loan in the sum of Rs.51,000/- from plaintiff on 13.03.1991 and
Rs.20,000/- on 19.03.1991. Receipts in that regard had been executed
by defendant in favour of plaintiff. It had been orally agreed between
the parties that the defendant shall be liable to pay interest @ 2% per
month on the amount advanced and the repayment to be made by
defendant shall be appropriated first towards the interest and the
balance towards the principal amount. The defendant paid a sum of
Rs.40,000/- to plaintiff on 20.01.1992 and a sum of Rs.20,000/- on
11.02.1992 i.e. total Rs.60,000/-. The interest on Rs.71,000/- comes to
Rs.14,965/-. After adjusting the amount paid by the defendant towards
the interest part the outstanding principal amount remained to be
Rs.25,965/-. The interest on the same from 12.02.1992 up to the date of
filing of the suit comes to Rs.18,695/-. The plaintiff is hence entitled for
recovery of a sum of Rs.44,660/- from the defendant which has not
been paid despite demand having been made in that regard.
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
3. On contentions as aforesaid, the plaintiff instituted an action on
20.01.1995 for recovery of a sum of Rs.44,660/- from the defendant
along with interest.
4. The defendant filed his written statement submitting that he had
not taken any amount on loan from plaintiff nor had executed any
receipts in that regard. The market rate of interest is not 2% per month.
The plaintiff is not entitled for the amount as claimed by him. The
plaintiff and defendant have been in business dealings in which
payments were made from time to time. The disputed amount of
Rs.71,000/- has already been paid by the defendant. On 21.01.1992 on
plaintiff's instructions, he had paid Rs.51,000/- to his brother Mohanlal
S/o Madanlal which was accepted by plaintiff. The defendant is hence
not liable for payment of any amount.
5. By the impugned judgment and decree plaintiff's claim has been
decreed by the trial Court holding that he had paid a sum of Rs.51,000/-
to defendant on 13.03.1991 and Rs.20,000/- on 19.03.1991. It had been
agreed between the parties that defendant shall pay interest at the rate of
2% per month. The defendant paid total amount of Rs.60,000/- to
plaintiff but has not proved that the amount of Rs.51,000/- paid to his
brother Mohanlal was on his instructions. The amount paid by
defendant was appropriated first towards the interest amount of
Rs.14,965/- hence as on 11.02.1992 plaintiff had to receive a sum of
Rs.25,965/- from the defendant. Plaintiff is entitled to interest @ 2%
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
per month on that amount till date of filing of the suit. The total
principal amount on the date of suit hence was Rs.44,660/-.
6. Learned counsel for the defendant has submitted that the
judgment and decree passed by the trial Court is illegal and contrary to
law. There was no specific contract between the parties that the amount
to be paid by defendant shall be appropriated first towards the interest
amount and the balance towards the principal amount as per Sections 59
and 61 of the Contract Act. Likewise, there was no agreement that
defendant shall be liable for payment of interest at the rate of 2% per
month on the amount advanced. The plea in this regard by plaintiff was
barred by virtue of Sections 91 and 92 of the Indian Evidence Act.
Payment by defendant to plaintiff's brother on his instructions had been
duly proved by him by way of his evidence but the trial Court has erred
in not accepting the same. The decree passed by the trial Court is hence
vitiated.
7. Per contra learned counsel for plaintiff has supported the
impugned judgment and has submitted that by way of his evidence
plaintiff has categorically proved that an agreement had been entered
into between the parties to the effect that the amount to be paid by
defendant shall be first appropriated towards the interest amount and
the balance shall be appropriated towards the principal amount. The
same was in consonance with the relevant legal provisions of the
Contract Act. The evidence shows that whatever transactions were
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
carried out by plaintiff of advancement of loan were on interest at 2%
per month and the transactions with the defendant were also on the
same terms. The trial Court has hence rightly calculated the interest on
the amount advanced in view of agreement between the parties. The
appeal hence deserves to be dismissed.
8. I have considered the submissions of the learned counsel for the
parties.
9. The defendant had pleaded that he had paid an amount of
Rs.51,000/- to plaintiff's brother Mohanlal on his instructions but
plaintiff specifically denied the same. Though defendant contended that
such payment was made on plaintiff's instructions but no such question
was put to plaintiff in his cross-examination. Even Mohanlal, brother of
plaintiff has not been examined by defendant nor has any other
evidence been adduced by him to show that the amount of Rs.51,000/-
paid by him to plaintiff's brother Mohanlal was on plaintiff's
instructions and by way of repayment of the amount advanced by
plaintiff to him. The trial Court has rightly held that payment of
Rs.40,000/- on 21.01.1992 and of Rs.20,000/- on 11.02.1992 was made
by defendant to plaintiff but the alleged amount of Rs.51,000/- has not
been paid by him to plaintiff.
10. From a perusal of the receipts Ex.P/1 and Ex.P/2 executed
between the parties it is apparent that thereunder only the fact of
advancement of amount by plaintiff to defendant was recorded and no
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
express term had been entered into between the parties that the
defendant shall be liable to pay interest at 2% per month. In absence of
any such condition contained in the documents Ex.P/1 and Ex.P/2 itself
it was not open for plaintiff to contend that any separate oral agreement
had been entered into between the parties in addition to the written
agreement to the effect that interest at 2% per month shall be payable
by defendant. The same is in contravention to the provisions of Sections
91 and 92 of the Indian Evidence Act. Accepting the contention of
defendant would be adding a term in the documents which was not
expressly included therein. It cannot be said that accepting the case of
plaintiff would be only proving a separate oral agreement as regards a
matter on which the documents Ex.P/1 and Ex.P/2 are silent. In the
documents there is no mention as regards the interest payable on the
amount advanced which categorically shows the intention of the parties
that no interest in excess of that which is lawfully claimable shall be
claimed.
11. The trial Court has held that there was an agreement between the
parties that interest at 2% per month shall be payable by defendant to
plaintiff on the basis of some other transactions entered into by plaintiff
or defendant with third persons. Any transaction between plaintiff and a
third person cannot be made enforceable upon the defendant. The
plaintiff may have agreed with certain third persons as regards the rate
of interest but since defendant was not a party to the said transactions
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
the same would not be binding upon him. It may be that in general
business practice interest at 2% per month was being charged at that
time but this Court cannot take judicial notice and apply the same to the
transactions between the parties for which there would necessarily have
to be a specific agreement in writing between them. Even if defendant
has repaid amount taken on loan by him from third persons at 2% per
month interest, but only for that reason it cannot be assumed that such a
term had been agreed between him and plaintiff. The finding of the trial
Court that defendant had agreed to pay interest at 2% per month to
plaintiff is hence vitiated and instead plaintiff would be entitled to the
normal rate of interest.
12. The plaintiff has appropriated the amount paid by defendant to
him first towards the interest part and the balance towards the principal
amount. The same was not permissible as there was no express contract
between the parties that the amount to be paid by defendant shall be
appropriated first towards interest and then towards the principal
amount. It was open for the parties to have entered into such an
agreement but they have not done so, hence such a contract cannot be
presumed on the basis of oral statement of plaintiff. The plaintiff has
not pointed out any provision which mandates that the amount paid
towards repayment of loan shall first be appropriated towards the
interest and the balance towards the principal amount. Moreover, no
evidence has been led by plaintiff to show that it was agreed between
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
him and defendant that the amount to be repaid shall be first
appropriated towards the interest amount and the balance towards the
principle.
13. The amount payable as on 20-01-1992 on the amount advanced
along with normal rate of interest of 12% on lending by Bank was
Rs.78,100/-. Rs.40,000/- was paid by defendant on that day. The
balance then remaining was Rs.38,100/- which with interest up to 11-
02-1992 was about Rs.41,800/-. Rs.20,000/- was paid by defendant that
day and the balance remained to be Rs.18,100/-. With interest on the
same it was Rs.24,600/- as on the date of filing of the suit. It is this
amount which would be the principle amount as on the date of filing of
the suit.
14. As a result, the impugned judgment and decree passed by the trial
Court is set aside and it is held that plaintiff is entitled for recovery of a
sum of Rs.24,600/- from the date of suit till date of realization.
15. The appeal is accordingly partly allowed. The parties shall bear
their own costs throughout.
(PRANAY VERMA)
JUDGE
ns
Signature Not Verified
Signed by: NEERAJ
SARVATE
Signing time: 01-11-2023
15:12:41
