T.R.Vivekanandan vs R.R.Mekala
2021 Latest Caselaw 12049 Mad

                                                                           S.A.(MD)No.687 of 2013

                        BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

                                                 DATED: 21.06.2021

                                                      CORAM:

                             THE HONOURABLE MR.JUSTICE G.R.SWAMINATHAN

                                               S.A.(MD)No.687 of 2013
                                                       and
                                                M.P.(MD)No.1 of 2013

                   1.T.R.Vivekanandan

                   2.T.V.Rajalakshmi                       ... Appellants/Appellants/Defendants

                                                          -Vs-

                   R.R.Mekala                             ... Respondent/Respondent /Plaintiff


                   PRAYER: Second Appeal is filed under Section 100 of the Civil Procedure
                   Code, against the Judgment and Decree dated 17.12.2012 made in A.S.No.
                   46 of 2012 on the file of the IV Additional District Judge, Madurai,
                   confirming the Judgment and Decree dated 10.10.2011 made in O.S.No.521
                   of 2007 on the file of the First Additional Subordinate Judge, Madurai.


                                         For Appellants    : Mr.A.R.M.Ramesh
                                         For Respondent    : Mr.D.Nallathambi


                                                     JUDGMENT

The defendants in O.S.No.521 of 2007 on the file of the I Additional

Subordinate Judge, Madurai, are the appellants in this second appeal. The

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S.A.(MD)No.687 of 2013

said suit was instituted by R.R.Mekala respondent herein. According to the

plaintiff, the defendants were carrying on business in the name and style of

M/s.Rajalakshmi Mills. They are husband and wife. On 22.10.1996,

they borrowed a sum of Rs.1,22,800/- from the plaintiff agreeing to repay

the same with interest at the rate of 18% per annum. The defendants

were paying the monthly interest till 21.07.2003. From 25.06.2003 till

24.07.2004, the defendants were making payments towards principal and

interest. According to the plaintiff, the defendants owed to pay a further

sum of Rs.99,628/- as on 22.10.2007. Even though the plaintiff issued suit

notice dated 23.10.2007, the defendants did not choose to respond.

2.The stand of the defendants was that their business ended in loss

and it was wound up on 31.03.2002 itself. Thereafter, there was a meeting

between the parties and the plaintiff agreed to receive the principal amount

in installments. According to the defendants, with the payment of Rs.

7,000/- on 29.10.2004, the entire liability was cleared and, there was

nothing further to be paid.

3.The husband of the plaintiff Thiru.Ramadoss examined himself as

P.W.1. Ex.A1 to Ex.A19 were marked. On the side of the defendants,

Ex.B1 to Ex.B3 were marked. The defendants did not enter the witness https://www.mhc.tn.gov.in/judis/

S.A.(MD)No.687 of 2013

box. The learned trial Judge by Judgment and decree dated 10.10.2011

decreed the suit as prayed for. Aggrieved by the same, the defendants filed

A.S.No.46 of 2012 before the fourth Additional District Munsif Judge,

Madurai. By Judgment and decree dated 17.12.2012, the appeal was

dismissed. Challenging the same, the second appeal came to be filed.

4.The second appeal was admitted on the following substantial

questions of law:-

(a) Whether the Courts below have misconstrued Ex.A.13

since a proper consideration of the said document in the light of the

attendant circumstances would lead to the inference that the suit

account had been settled.

(b) When the plaint clearly admits that the first defendant was

only the authorised signatory or agent of the second defendant, in its

short cause title and long cause title and reaffirms it in the body of

the plaint, can there be a decree for recovery of money as against the

admitted agent of the alleged borrower?

(c) Is not admission the best form of evidence and when the

defense case is founded on the admission of P.W.1, can non-

examination of the defendants be fatal to it?

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S.A.(MD)No.687 of 2013

5.The learned counsel appearing for the appellants reiterated all the

contentions set out in the memorandum of grounds and called upon this

Court to answer the substantial question of law in favour of the appellants

and set aside the impugned Judgment and decree and allow this appeal.

6.Per contra, the learned counsel appearing for the respondent

submitted that the impugned Judgment does not call for any interference.

The learned counsel placed heavy reliance on the decision reported in

(1999) 3 SCC 80 (Industrial Credit & Development Syndicate Vs.

Smithaben H.Patel ). His core contention is that it has been authoritatively

laid down that when the defendant had taken a loan and interest had

accrued on the principal amount and when payments are made,

appropriation will first be towards interest. In the case on hand, the money

that was paid by the defendants was appropriated only towards interest.

Whatever balance amount available was appropriated towards the principal.

7.The learned counsel would point out that the factum of borrowal

and the rate of interest at 18% per annum is not in dispute. Even a simple

application of arithmetic would show that the suit claim had been clearly

and accurately calculated. He would also point out that when the

defendants fall back on subsequent oral agreement, the burden was clearly https://www.mhc.tn.gov.in/judis/

S.A.(MD)No.687 of 2013

on them to establish the same. In the case on hand, the defendants for the

reasons best known, avoided entering the witness box. He called upon this

Court to draw adverse inference against such a conduct. He also would

remind the Court that when exercising jurisdiction under Section 100 of

C.P.C., in as much as the courts below have correctly appreciated the factual

aspects and also applied the correct principles of law, no interference is

called for. He prayed for dismissal of the second appeal.

8. carefully considered the rival contentions and went through the evidence

on record. There is no dispute that the plaintiff had lent a sum of Rs.

1,22,800/- on 22.10.1996. Even though in Ex.A1-receipt, it is

mentioned that the loan amount was received by M/s.Rajalakshmi Mills

and D1-T.R.Vivekanandam had signed in the capacity of authorised

signatory, the specific stand of the plaintiff is that the borrowal was

jointly made by the defendants who are husband and wife. If the

borrowal was by the proprietary concern, liability will fall only on the

proprietary concern or the proprietor. There is no distinction between the

two. Merely because, the authorised signatory was corresponding with

the creditor, that would not by itself cast any liability on the authorised

signatory.

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S.A.(MD)No.687 of 2013

9.The learned counsel appearing for the respondent draws my

attention to Order 1 Rule 7 of C.P.C., which states that where the plaintiff is

in doubt as to the person from whom he is entitled to obtain redress, he may

join two or more defendants in order that the question as to which of the

defendants is liable, and to what extent, may be determined as between all

parties. Therefore, the plaintiff cannot be faulted for making both the

defendants as parties to the suit. The question that arises for my

consideration is on whom the liability should be fastened. The stand of the

appellant is that the borrowal was by M/s.Rajalakshmi Mills and that it was

the second defendant Raja Lakshmi who was the proprietrix of the said

concern and that therefore, even assuming that the suit claim had been

established, still it is only the proprietrix against whom the decree can be

passed and that defendant No.1 cannot be fastened with any liability.

Though as a proposition of law, this contention is acceptable, still in the

facts and circumstances of the case, in as much as, the defendants have not

entered the witness box to controvert the claim of the plaintiff, the

defendants cannot hide behind technicalities.

10.The case of the plaintiff is not that M/s.Rajalakshmi Mills is the

borrower. The case of the plaintiff is that the defendants are joint

borrowers. Therefore, the second substantial question of law is answered in https://www.mhc.tn.gov.in/judis/

S.A.(MD)No.687 of 2013

favour of the respondent and against the appellants, notwithstanding the

description set out in the cause title. However, the outcome of this appeal

does not depend on my answer to the aforesaid substantial question of law.

It turns on the issue as to whether the defendants have cleared the liability

in full or not. It depends on whether the payments made by the defendants

could have been appropriated towards interest or not.

11.I do not find much substance in the contentions of the respondent's

counsel that adverse inference should be drawn against the defendant for

not entering the witness box. It is well settled that if the defendant can

establish his defence by anchoring it on the plaintiff's evidence, then, failure

to enter the witness box need not be put against him. In the case on hand,

the defendants have specifically pleaded that following the loss suffered by

their business, they had expressed their difficulties to the plaintiff and that

the plaintiff also agreed to receive the subsequent payments towards the

principal amount. The defendants have been clearing the liability in

installments by way of cheque payments. The cheques were enclosed with

the covering notes. Some of the covering notes have been marked by the

plaintiff herself through P.W.1. I went through the exhibits A9 to A13. In

fact, Exs.A2 to A8 are also documents evidencing payments made by the

defendants. A comparison of the covering notes would indicate that while https://www.mhc.tn.gov.in/judis/

S.A.(MD)No.687 of 2013

some payments were specifically towards interest, some exhibits clearly

mention that the defendants were making the payments only towards the

principal.

12.I sustain the contention of the learned counsel appearing for the

respondents that the defendants cannot unilaterally make a claim that his

payment should be appropriated only towards principal and not towards

interest. But in the case on hand, there appears to be a clear pattern in the

matter of making payment. The contents of Ex.A13 are of utmost

relevance. It clearly states that the account had been settled. Balance is

shown as “Nil”. If the plaintiff did not accept the statement made by the

defendants, the plaintiff ought to have sent a notice then and there.

13.As rightly pointed out by the learned counsel appearing for the

appellants, till 23.10.2007, the plaintiff did not send any communication to

the defendants. The loan transaction dates back to 22.10.1996. The

defendants have been periodically making the payments. 29.10.2004 is the

late date of such payments. According to the defendants, with that

payment, the loan account got settled. If according to the plaintiff, the loan

was not settled, the plaintiff ought to have sent a notice. The fact that the

plaintiff did not send any notice clearly probabilises the case of the https://www.mhc.tn.gov.in/judis/

S.A.(MD)No.687 of 2013

defendants. The defendants have more than established their defence

through Ex.A9 to Ex.A13 marked by the plaintiff herself through her

husband P.W.1.

14.The Courts below have completely misdirected themselves in

holding that whatever payment was made by the defendants can only be

towards interest. The Courts below lost sight of the fact that it is always

open to the parties to vary the terms of the contract. In the case on hand,

the defendants have pleaded that since their business had suffered loss, they

should be permitted to clear the liability by making payments towards

principal. A mere look at the figures mentioned in the plaint would show

that over a period of several months, payments were made. I hold that the

defendants have established that the terms of agreement were subsequently

varied by a oral understanding and that by 29.10.2004, the entire loan

liability has been cleared. Therefore, the other substantial questions of law

are answered in favour of the appellants. The impugned Judgment and

decree are set aside and the suit is dismissed.

15.The second appeal is allowed. No costs. Consequently, connected

miscellaneous petition is closed.

21.06.2021

rmi https://www.mhc.tn.gov.in/judis/

S.A.(MD)No.687 of 2013

G.R.SWAMINATHAN, J.

rmi

To

1.The IV Additional District Judge, Madurai,.

2.The First Additional Subordinate Judge, Madurai.

3.The Section Officer, Vernacular Records, Madurai Bench of Madras High Court, Madurai.

Judgment made in S.A.(MD)No.687 of 2013

21.06.2021

https://www.mhc.tn.gov.in/judis/