Madras High Court
B.Vinayak Nilesh vs Rakesh Harlalka on 7 March, 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 07.03.2022
CORAM:
THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY
Original Application No.737 of 2021 &
A.No.673 of 2022
in
C.S.(Comm. Div.) No.94 of 2021
O.A.No.737 of 2021
1. B.Vinayak Nilesh
2. P.Baburaj ... Applicants/Plaintiffs
Vs.
1.Rakesh Harlalka
2.Rahul Tibrewala
3.Rahul Kumar Singhi ... Respondents/Defendants
and 5 others
A.No.673 of 2022
1.Rakesh Harlalka
2.Rahul Tibrewala
3.Rahul Kumar Singhi
4.Narendra Harlalka
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5.Urmila Harlalka
6.Narendra Harlalka HUF
Represented by its Karta,
Mr.Narendra Harlalka,
Door No.6A, “Triveni House”,
Govindan Street,
Ayyavoo Colony,
Aminjikarai, Chennai-600 029.
7.Rashmi Harlalka
8.Sobhag Devi Singhi ..Applicants/
Defendants
vs
1.B.Vinayak Nilesh
2.Baburaj ..Respondents/
Plaintiffs
Prayer in O.A.No.737 of 2021: This Original Application is filed under Order
XIV Rule 8 of Original Side Rules r/w. Order 39 Rule 1 and 2 of CPC praying to
grant an order of interim injunction restraining the respondents/defendants or
their men, agents from presenting schedule cheques belonging to the plaintiffs
for encashment, given as security to the Respondents 1-2/Defendants 1-3 in
pursuance of mortgage deed dated 16.04.2012 pending disposal of the suit.
Prayer in A.No.673 of 2022: This application is filed under Section XIV Rule 8
of O.S.Rules read with Order XXXIX Rule 4 of CPC praying to vacate the interim
order granted on O.A.No.737 of 2021 in C.S.No.94 of 2021, dated 25.11.2021,
subsequently extended on 20.12.2021.
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For Applicants
in O.A.No.737 of 2021 and : Mr.P.R.Raman S.C.
Respondents in A.No.673/2022 for M/s.C.Seethapathy
For Respondents in : Mr.M.Santhanaraman
O.A. No.737 of 2021 and
Applicants in A.No.673
of 2022
ORDER
The suit is filed for declaratory relief, redemption of mortgage, a
money decree and for permanent injunction. The original application is filed
by the plaintiffs in the suit. For the sake of convenience, in this order, the
applicants in the original application are referred to as the applicants and the
respondents thereto as the respondents. By the original application, the
applicants seek to restrain the respondents from presenting specific cheques
for payment. By an earlier order dated 25.11.2021, an order of interim
injunction was granted for a limited period. Application No.673 of 2021 is filed
by the respondents to vacate the order of interim injunction. The parties
endeavoured to resolve the dispute through mediation, but the mediation was
unsuccessful.
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2. In support of the original application, learned senior counsel for the
applicants submitted that the first applicant and respondents 1 to 3 entered
into a mortgage deed on 16.04.2012. In terms thereof, respondents 1 to 3
advanced a sum of Rs.82 lakhs to the first applicant. In addition, a sum of
about Rs.68 lakhs was received from some of the other respondents, thereby
aggregating to a sum of Rs.1.5 crore. The applicants asserted that the
respondents are money lenders as per the Tamil Nadu Money Lenders Act, 1957
(the Money Lenders Act). Keeping in mind the fact that it is a secured loan, it
is contended that simple interest at not more than 9% p.a. may be charged on
the transaction as per the Money Lenders Act. By relying upon three
certificates issued by a Chartered Accountant, the applicants further asserted
that a sum of about Rs.1.91 crore is refundable by the respondents to the first
applicant if simple interest is calculated at 9% p.a.
3. As regards the second mortgage deed dated 13.03.2020, learned
senior counsel for the applicants stated that no money was received under the
second mortgage. By drawing reference to the date of execution of the said
second mortgage deed, i.e.13.03.2020, it is pointed out that the cheques in
respect of which the original application is filed were all issued between 2012
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and 2018. On such basis, it is asserted that these cheques cannot be relied
upon as evidence of consideration under the mortgage deed dated 13.03.2020.
According to the applicants, as against a sum of Rs.1.5 crore which was
received under the first mortgage, a sum of about Rs.3.87 crores was repaid.
By relying upon a judgment of this Court, A.Ganesa Nadar v. Jayalakshmi 2009
(6) CTC 181, it is contended that a person engaged in the business of lending
money is subject to the provisions of the Money Lenders Act.
4. The applicants further contended that unless the interim order is
made absolute, the applicants would be put to irreparable hardship inasmuch
as they would be subject to proceedings under the Negotiable Instruments Act,
1881 (the NI Act). An offer is made to open up the bank statements and books
of account for scrutiny by an independent chartered accountant so as to arrive
at the true and correct amount paid and payable under the transactions with
the respondents.
5. These contentions were strongly refuted by the respondents. By
drawing reference to the first mortgage deed, learned counsel for the
respondents pointed out that the amounts due and payable thereunder should
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have been paid within a period of fifteen months. However, the first applicant
failed to adhere to his contractual obligations under the first mortgage deed.
As regards the second mortgage deed, the respondents relied upon bank
statements. With specific reference to an abstract at page 15 of the typed set
filed by the respondents, it was submitted that a total sum of Rs.415.50 lakhs
was disbursed to the first or second applicant through bank channels. In
support of such contention, the respondents relied upon the statements of
account of about 11 persons, including the eight respondents herein.
Therefore, it was contended that the second mortgage is clearly supported by
consideration.
6. Turning to the relief prayed for, learned counsel for the respondents
contended that there are statutory presumptions both under Sections 118 and
139 of the NI Act. Such presumptions operate until the contrary is proved.
Therefore, the respondents contended that the relief prayed for cannot be
granted. The same contention was also advanced from the perspective of the
Specific Relief Act, 1963 (the SRA). With specific reference to Section 41(d) of
the SRA, the respondents contended that the applicants are endeavouring to
prevent the institution of proceedings under Section 138 of the NI Act through
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this application. In support thereof, the judgment of the Delhi High Court in
Vishal Gupta v. Udai K. Lauria 2009 SCC OnLine Del 2713 was placed. The
respondents contended that transactions arising out of negotiable instruments
are exempted under the Money Lenders Act by relying upon the judgment of
the Division Bench of this Court in Sri Kalpatharu Financiers v. V.Natarajan,
CDJ 2012 MHC 2307. The respondents also relied upon the WhatsApp
correspondence between the parties in early August 2021, whereby the
applicants agreed to clear the liability disclosed by WhatsApp of 02.08.2021. In
effect, the respondents contended that this would justify a judgment on
admissions under Order XII Rule 6 of CPC as per the judgment of the Hon'ble
Supreme Court in Uttam Singh Duggal v. United Bank of India (2000) 7 SCC
120. By citing N.M.Veerappa v. Canara Bank (1998) 2 SCC 317, it was
contended that the Court has the discretion to fix the appropriate interest rate
in a mortgage suit. By drawing reference to paragraph-4 of the earlier ad-
interim order, the respondents also contended that the earlier order was
granted for the limited purpose of preventing further complications while
parties endeavour to resolve the dispute. By way of a brief rejoinder, the
applicants contended that the exclusion of negotiable instruments from the
rigours of the Money Lenders Act would not enure to the benefit of the
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respondents inasmuch as the suit pertains to the two mortgage deeds executed
by the parties. As regards the reliance on Section 41(d) of the SRA, learned
senior counsel for the applicants pointed out that the judgment of the Delhi
High Court was in an application under Section 9 of the Arbitration and
Conciliation Act, 1996 and, therefore, the relief prayed for was refused on the
ground that the scope of Section 9 is limited to preserving the subject matter
of arbitration. With regard to the statements of account produced by the
respondents, the applicants contended that such statements of account were
self-serving unlike the certificates produced by the applicants in support of
their case.
7. Upon consideration of the rival contentions, it should be noticed
at the outset that the applicants seek to restrain the respondents from
presenting the cheques specified in the schedule to the judge's summons of the
original application. These cheques were issued either by the first or the
second applicant as follows: the cheques at Sl. Nos.1 to 33 by the first
applicant and those at Sl. Nos.34 to 39 by the second applicant. As pointed out
by learned counsel for the respondents, there is a statutory presumption under
the NI Act. Such statutory presumption is in respect of negotiable instruments,
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in general, under Section 118 and, in respect of cheques, in particular, under
Section 139 thereof. Such statutory presumption is couched in mandatory and
not permissive language. While such presumption is rebuttable and not
conclusive, it would operate until the contrary is proved. In the face of such
statutory presumption, the applicants have a herculean task. Although the
Court's power to grant interlocutory relief in exercise of equitable jurisdiction
is expansive, at a minimum, the existence of a statutory presumption entails
setting a high threshold for interference. For instance, there could potentially
be a case for interference if there is strong prima facie evidence that the
liability was otherwise discharged after the relevant negotiable instrument was
issued. Towards such end, the documentary evidence should be examined
prima facie. In the case at hand, both the mortgage deeds are on record. The
second mortgage deed indicates that a sum of Rs.415.50 lakhs was advanced by
the mortgagees to the mortgagor. As prima facie evidence thereof, the
respondents have placed the statements of account of 11 persons indicating
that such persons paid a sum of Rs.415.50 lakhs to the first or second
applicant. Given the fact that all these payments were made through bank
channels, prima facie, it appears that the second mortgage deed was
supported by consideration. There also does not appear to be evidence of
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repayment of these amounts. Consequently, it cannot be concluded prima
facie that the respondents are not entitled to payment.
8. As a corollary, the applicants are not entitled to the interim
relief as prayed for. Although the respondents also relied on Section 41(d) of
the SRA, it does not appear from the materials on record that statutory notices
under the NI Act were issued. Therefore, it is not necessary to record
conclusions on the said submission.
9. For reasons set out above, O.A.No.737 of 2021 is dismissed and
A.No.673 of 2022 is allowed. As a consequence, the order of interim injunction
granted on 25.11.2021 stands vacated. Notwithstanding the dismissal of this
application, it will be open to the applicants to file an appropriate application
for the appointment of a chartered accountant to inspect the accounts.
07.03.2022
Index : Yes / No
kal
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SENTHILKUMAR RAMAMOORTHY, J
kal
Original Application No.737 of 2021 &
A.No.673 of 2022
in
C.S.(Comm. Div.) No.94 of 2021
07.03.2022
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