Madras High Court
Mrs.Shanthi Krishnan (Deceased) vs Arumuga Mudaliar Sornam Educational ... on 24 November, 2023
Author: N.Sathish Kumar
Bench: N.Sathish Kumar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 24..11.2023
CORAM
THE HON'BLE MR.JUSTICE N.SATHISH KUMAR
Summary Civil Suit No.413 of 2018
1.Mrs.Shanthi Krishnan (Deceased)
2.G.S.Krishnan
3.Ms.G.K.Bhuvaneshwari
[Defendants 2 and 3 were brought on record as legal
heirs of the deceased 1st plaintiff as per order dated
26.03.2021 in A.No.1362 of 2021]
... Plaintiffs
-Versus-
Arumuga Mudaliar Sornam Educational Trust (Regd.)
Rep. By its Trustees,
(1) Mr.K.Rajapiradhaban
(2) Mr.P.T.Rajan
(3) Mrs.K.Bhanumathi
(4) Mrs.R.Poonkodi
Having Registered Office
at No.16, New Street, Thittakudi,
Cuddalore District
... Defendant
https://www.mhc.tn.gov.in/judis
2
Suit filed under Order VII, Rule 1 of O.S. Rules, 1994 r/w Order XXXVII,
Rule 1 of the Code of Civil Procedure, 1908 praying for a judgment and decree
against the defendant trust for recovery of a sum of Rs.2,27,63,585/- (Rupees
Two Crore Twenty Seven Lakh Sixty Three Thousand Five Hundred and Eighty
Five only) together with interest @ 24% p.a. from the date of plaint till date of
realization in respect of a sum of Rs.1,00,00,000/- (Rupees One Crore only) and
@ 36% p.a. from the date of plaint till date of realization in respect of a sum of
Rs.82,00,000/- (Rupees Eighty Two Lakh only); and for cost of the suit.
For Plaintiff(s) : Mr.K.V.Babu for plaintiff 2 & 3
For Defendant : Mr.P.B.Sampath Kumar
JUDGEMENT
The suit is for recovery of a sum of Rs.2,27,63,585/- (Rupees Two Crore
Twenty Seven Lakh Sixty Three Thousand Five Hundred and Eighty Five only)
together with interest @ 24% p.a. from the date of plaint till date of realization in
respect of a sum of Rs.1,00,00,000/- (Rupees One Crore only) and @ 36% p.a.
from the date of plaint till date of realization in respect of a sum of
Rs.82,00,000/- (Rupees Eighty Two Lakh only); and for cost of the suit.
2. It is the case of the plaintiff that in August, 2015, the defendant Trust
representing its Trustees approached the plaintiff for a loan to meet the object of
the trust. It was unanimously resolved by the trust to avail loan by a resolution
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dated 10.08.2015. Accordingly, on 12.08.2015, the defendant trust borrowed a
sum of Rs.50,00,000/- vide cheque bearing No.000218 dated 12.08.2015 drawn
on Andhra Bank, Ashok Nagar Branch, Chennai favouring the defendant trust
and a promissory note was executed for the same on the same day agreeing to
pay interest @ 24% p.a.. Similarly, another sum of Rs.50,00,000/- was borrowed
on 13.08.2015 by the defendant trust from the plaintiff vide cheque bearing
No.000219 dated 13.08.2015 drawn on Andhra Bank, Ashok Nagar, Chennai and
a promissory note was executed on the same day agreeing to pay interest @ 24%
p.a.. Thus, a total sum of Rs.1,00,00,000/- was borrowed by the defendant trust
as loan. Besides, the defendant trust has also deposited the title deeds of the
immovable properties belonging to the defendant trust measuring an extent of 5
Acres and 2 cents comprised in S.No.96/1 at Vaidyanathapuram Village,
Thozhudur and an extent of 3 Acres and 89 ½ cents comprised in E.Keeranur
Village belonging to one K.Rajapiradhaban and measuring an extent of 1 Acre
and 36 ½ cents belonging to one late A.Krishnaswamy. The defendant trust also
confirmed the same by way of affidavit dated 13.08.2015 executed by the
trustees authorized by the resolution as aforesaid.
3. Thereafter, the defendant trust borrowed a further sum of Rs.82,00,000/-
(Rupees Eighty Two Lakhs only) and the money was transferred through RTGS
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on 11.01.2016 favouring the trust account maintained with Vijaya Bank, Trichy
Branch on an urgent commitment so as to avoid NPA status in respect of the
loan account of the defendant trust with Vijaya Bank, Trichy Branch. There was
a resolution passed by defendant trust to avail such loan. The defendant trust
furnished a confirmation of balance for the loan of Rs.82,00,000/-borrowed from
the plaintiff agreeing to repay the same with monthly compounded interest @
36% p.a. Though the defendant trust agreed to return the loan amounts with
interest thereon on a short term basis, they prolonged for more than a year.
Further, by letter dated 29.09.2016, the defendant trust confirmed that as on
31.08.2016, the trust owe a sum of Rs.2,07,66,395/- to the plaintiff. As on
03.06.2018, the amount due and payable towards loans was Rs.2,27,63,585/- .
Despite repeated demands to settle the loan dues, the loan dues were not paid off.
Hence, this suit.
4. Pending suit 1st plaintiff died and hence, her husband and daughter being
legal heirs of the deceased 1st plaintiff got impleaded themselves as plaintiffs 2
and 3.
5. The defendant filed his written statement denying the averments made in
the plaint and inter alia contending that the defendant trust was established to do
charitable services and to provide education to downtrodden and poor people.
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The defendant trust has started carrying on Higher Secondary School, Arts and
Science College, Polytechnic College and Engineering College. The deceased 1st
plaintiff's husband – G.S.Krishnan, the 2nd plaintiff was an Auditor for the
defendant trust and he was continued to be Auditor till the financial year 2015-
16. Earlier, the defendant trust availed loan from Indian Bank. When the
defendant trust was in need of further amount for the development of educational
institutions, the 2nd plaintiff voluntarily offered to advance loan to the trust
provided the defendant trust should execute a promissory note for the alleged
amounts still due under the previous loans to the extent of Rs.82,00,000/- as on
31.08.2023. For that purpose, 2nd plaintiff opened a current account in Andhra
Bank at K.K.Nagar Branch, Chennai in which the deceased 1st plaintiff, the wife
of the 2nd plaintiff had an account. On 12.08.2015, 2nd plaintiff got a promissory
note from the defendant trust in favour of his wife, the deceased 1st plaintiff for a
sum of RS.50,00,000/- whereby the defendant trust agreed to repay the loan with
interest @ 24% p.a. with monthly compounded interest. Besides promissory note,
2nd plaintiff had also obtained 20 leaves of cheque book signed on both sides of
each blank cheque without putting name, date and amount.
6. It is further contended by the defendant trust that even though a sum of
RS.50,00,000/- was transferred from her account to the account of the defendant
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trust by cheque bearing No.000218 dated 12.08.2015 , a sum of Rs.25,00,000/-
was withdrawn by 2nd plaintiff himself through his Assistant one R.Santhana
Krishnan by using the self cheque given by K.Rajapiradhapan. Hence, suit
promissory note dated 12.08.2015 was not supported by consideration.
Similarly, insofar as suit promissory note dated 13.08.2015 obtained by the 2 nd
plaintiff for Rs.50,00,000/- from the defendant trust in favour of his wife
agreeing to pay the amount with 24% p.a. with monthly compounded interest is
concerned, this time also, the 2nd plaintiff withdrew a sum of Rs.9,50,000/- on
14.08.2015, Rs.9,50,000/- on 27.08.2015, and Rs.8,50,000/- on 28.08.2015 and
in all he withdrew a total sum of Rs.27,50,000/- through Santhana Krishnan by
using the signed blank cheques given by the defendant trust. Hence, a sum of
RS.22,50,000/- alone was paid under the suit promissory note dated 13.08.2015
and thus it was not supported by full consideration. The defendant trust that
more than Rs.52,00,000/- had already been paid towards the said promissory note
to the 2nd plaintiff.
7. As far as another loan of Rs.82,00,000/-, which was transferred by the
deceased plaintiff from her account maintained with Andhra Bank at K.K.Nagar
Branch to Vijaya Bank at Trichy through electronic transfer, while admitting the
transaction, it has been contended by the defendant trust that the 2nd plaintiff had
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managed to get a letter from the defendant trust confirming that the trust owned a
sum of Rs.82,00,000/- to the deceased plaintiff with an undertaking to repay the
same with interest though it was not agreed by the trust to pay interest on that
amount.
8. Based on the above pleadings of either party, the following issues have
been framed for trial:-
(1) Whether the plaintiff is entitled to recovery of a
sum of Rs.2,27,63,585/- with 24% interest on
Rs.1,00,00,000/- and with interest 36% interest on
Rs.82,00,000/-.
(2) Whether the claim that the husband of the
plaintiff, who was the Chartered Account of the
Trust, had taken the monies deposited by the
plaintiff into the accounts of the Trust is true?
(3)Whether the plaintiff is entitled to interest at the
rate claimed by her in the plaint?
(4)To what reliefs the parties are entitled?
9. During trial, on the side of the plaintiffs, 2nd plaintiff examined himself
as P.W.1 and marked Ex.P.1 to Ex.P.17. On the side of the defendant trust, one of
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its trustees viz., Rajapiradhapan was examined as D.W.1 and Ex.D.1 to Ex.D.13
were marked.
10. The learned counsel for the plaintiffs would submit that execution of
the promissory notes were not disputed. The loan amounts under the suit
promissory notes were transferred to the trust account only through the bank
from the account maintained by the deceased 1st plaintiff, the wife of the 2nd
plaintiff. These facts were also not in dispute. Thought defendant trust had set up
a defence that they discharged a sum of Rs.52.00 lakh, the same has not been
established by the defendant trust and unless and until plea of discharge of part
payment towards loans due and payable under the suit promissory note is
established, the plea of discharge cannot be said to be proved. Therefore,
according to the learned counsel, the suit has to be decreed as prayed for.
11. Per contra, the learned counsel for the defendant trust would fairly
conceded that a sum of Rs.82,00,000/- was transferred by way of RTGS through
Andhra Bank, K.K.Nagar Branch, Chennai. The dispute is only with regard to
repayment of Rs.52,00,000/-. According to the learned counsel for the defendant
trust, under Ex.D.8-Cheques (series), the 2nd plaintiff had encashed monies on
various dates to the tune of Rs.52,00,000/-. Therefore, the learned counsel
contended that Rs.52,00,000/- has to be adjusted from the loan outstanding.
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Further, according to the learned counsel, the interest charged is usurious and
that the defendant trust had already paid huge amount towards interest.
12. The learned counsel for the defendant would further submit that the
document has been tampered and not executed properly by the defendant trust.
The 2nd plaintiff who was the Auditor for the defendant trust had managed to
create the documents by abusing his position.
Issue Nos.1 to 4:
13. The suit has been laid on the basis of Ex.P.4 Promissory Note dated
12.08.2015 and Ex.P.5 Promissory Note dated 13.08.2015 and also based on
Ex.P.9 confirmation of loan balance of Rs.82,00,000/- executed by the defendant
trust acknowledging that they owe the said sum of Rs.82,00,000/- to the 1st
plaintiff besides the amounts due and payable under the suit promissory notes. It
is the specific case of the plaintiffs that under suit promissory notes Ex.P.4 and
Ex.P.5, a sum of Rs.1,00,00,000/- was advanced. In this regard, Ex.P.3
resolution was passed by the defendant trust to avail loan. Ex.P.2 is the letter
issued by the defendant trust requesting for loan. Besides Ex.P.6 was issued by
the defendant trust confirming the borrowal of amounts. Thereafter, under
Ex.P.7-Minutes of the Board of Trustees of the defendant's trust it was decided to
make a further request for additional loan and a requisition was made for
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additional loan under Ex.P.8. Accordingly, a sum of Rs.82,00,000/- was
transferred in 2016 apart from the amounts under promissory note. This was
confirmed by the defendant trust under Ex.P.9 to Ex.P.12. D.W.1 who is the son
of the Managing Trustee during his cross examination admitted that at the time of
transaction he was hardly 4 years old and according to him, he had gathered
information about the transactions after filing of the present suit. Be that as it
may, he had admitted the signatures of his father and th eother trustees found in
suit promissory note Ex.P.4 & Ex.P.5-Promissory Notes and Ex.P.9 to Ex.P.10-
confirmation of loan balance and also and also on other documents viz., Ex.P.6 to
8 documents which are affidavit confirming the deposit of title deeds in respect
of immovable properties, minutes of the board of trustees of the defendant trust
and requisition letter for additional loan. Ex.P.11 is the letter from Andhra Ban,
Ashok Nagar Branch confirming the amount transferred by the 1st plaintiff to the
account of the defendant trust held with Andhra Bank, Ashok Nagar Branch and
also Vijaya Bank, Trichy Branch on four different dates. Ex.P.12 is the statement
of accounts of the defendant trust in respect of loan account with the 1st plaintiff.
14. Plaintiff has also filed Ex.P.13 to Ex.P.16 income tax related
documents to show that TDS had been deducted and also to show that 1 st plaintiff
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had means to advance the amounts as loan to the defendant trust. Ex.P.17 is a
balance sheet prepared by the Auditor of the defendant trust wherein also it was
admitted that a sum of Rs.1,64,50,000/- was due and payable to the 1st plaintiff. It
is the contention of the defendant trust that since the 2nd plaintiff,the husband of
the 1st plaintiff was an Audition had misused the documents. In this regard it is
relevant to note that a letter from the trust would go to show that no allegation
was made against the Auditor and in fact, the said letter recorded the
appreciation of the valuable services rendered by the 2nd defendant as Auditor.
Though the defendant trust contended that the suit documents were forged and
created, there was no reason why their accounts reflected the payment of interest
paid towards the loan amounts under Ex.P.12. This document was not disputed
by the defendant trust.
15. When the execution of promissory note and receipt of Rs.82,00,000/-
besides consideration received under the promissory notes were not disputed and
when the defendant took a plea of discharge of part of amount, the onus lies on
the defendant trust to establish the discharge. Much reliance was placed on
Ex.D.8 -Cheuqe (series). According to the defendant trust, one Santhana
Krishnan, who was acting as Liaison, for both the parties had withdrawn the
amount, it is the contention of the defendant trust that those amounts had been
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withdrawn only by the 2nd defendant. It is relevant to note that those cheques
were encahsed by the trustees. Merely because a person who was acting liaison
withdrew the amount, it cannot be presumed that those amounts had been
withdrawn and paid to the 2nd plaintiff. It is relevant to note that though it is was
the defence of the defendant trust that Santhana Krishnan withdrew the amount
and handed over the same to the 2nd plaintiff, there was no reason assigned by
the defendant trust as to why they had not chosen to examine him before the
court. Therefore, no credence could be given to the oral evidence of D.W.1 for
the simple reason that such a fact came to be introduced for the first time in the
proof affidavit in chief examination without any pleading thereof in the plaint.
16. Considering both oral and documentary evidence, this court is of the
view that the execution of negotiable instruments viz., Ex.P.4 & Ex.P.5-
Promissory Notes and Ex.P.9 Letter confirming the additional loan of
Rs.82,00,000/- obtained by the defendant trust and acknowledging the loans due
and payable and passing of consideration have been established on record. The
defendant trust had not brought any rebuttal evidence to contend that Ex.P.4 &
P.5 were not supported by any consideration. Statutory presumption available
under Section 118 of the Negotiable Instruments Act would automatically get
attracted to Ex.P.4 and Ex.P.5 Promissory Note. That apart, subsequently
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payment of Rs.82,00,000/- made through RTGS was also not disputed. It was
admitted by the defendant trust in the written statement itself.
17. It is also the contention of the defendant trust that Santhana Krishnan
had signed the cheques and withdrew the amounts and Santhana Krishnan was
none other than the employee of the 2nd plaintiff and therefore, it has to be
presumed that the entire amount of Rs.52,00,000/- withdrawn on different dates
under Ex.D.8 Cheques (series) has to be taken as discharge. In this regard the
evidence of P.W.1 show that Santhana Krishnan was a freelancer and was
rendering service not only to the plaintiffs but also to the defendant trust. The
very suggestion made to P.W.1 would clearly indicate that Santhana Krishnan
was rendering his service in his individual capacity. Such being the position,
infrence would arise that after receipt of withdrawal of cheque amount he must
have given the amounts to the defendant trust. If the defendant trust asserts that
those amounts had been given only to the 2nd plaintiff, the defendant trust ought
to have examined Santhana Krishnan. That has not been done. In such view of
the matter the alleged discharge of sum of Rs.52,00,000/- under Ex.D.8 cheques
has not been established. Once the plea of discharge fails, the natural corollary is
that statutory presumption would get attracted to the promissory notes. Execution
of Ex.P.4, Ex.P.5 and Ex.P.9 and all other connected documents and the
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signatures of the managing trustee and other trustees and the resolutions and
letter requesting for loan have been clearly established. The signatures thereon
were also not disputed by the defendants. Further, in 2016, further sum of
Rs.82,00,000/- was borrowed as loan. Under Ex.P.17-balance sheet of the
defendant trust would also indicate the liability of Rs.1,64,50,000/-as on
31.03.2017. Ex.P.12 would show that interests at the contractual rate were paid
for some time.
18. This court is therefore of the view that the defendant has to pay at least
the admitted amount of Rs.1,64,50,000/- with interest. Considering the fact that
contractual interests were paid for some time this court is inclined to restrict
interest from the date of plaint with simple interest @ 9% for Rs.1,64,50,000/-
till date of realisation.
19. For the foregoing discussions, the plaintiffs are entitled to recover the
suit amount as indicated above. The issue Nos.1 to 4 are answered accordingly.
In the result, suit is decreed with costs to the extent indicated above. The
plaintiff is entitled to recover a sum of Rs.1,64,50,000/- (Rupees One Crore Sixty
Four Lakh and Fifty Thousand only) together with interest thereon @ 9% p.a.
from the date of plaint till date of realization.
Index : yes / no 24..11..2023
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Neutral Citation: yes / no
kmk
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List of witnesses examined on the side of the plaintiff:
P.W.1-G.S.Krishnan (2nd Plaintiff)
List of Witnesses examined on the side of the defendants:
D.W.2-Rajapiradhapan (One of the trustees)
List of documents marked on the side of the plaintiff:
Ex.P.1 03.10.2019 Original Letter of Authorization authorizing P.W.1 to give
evidence in the case
Ex.P.2 05.08.2015 Letter issued by the defendant trust requesting for loan of
Rs.1,00,00,000/-
Ex.P.3 10.08.2015 Minutes of the Board of Trustees of the defendant Trust
authorizing the Managing trustee Mr.A.Krishnasamy and
or the Member Trustee Mr.K.Rajapiradhaban to represent
on behalf of the defendant Trust
Ex.P.4 12.08.2015 Demand Promissory Note for Rs.50,00,000/- executed by
the trust in favour of the 1st plaintiff
Ex.P.5 13.08.2015 Demand Promissory Note for Rs.50,00,000/- executed by
the trust in favour of the 1st plaintiff
Ex.P.6 13.08.2015 Affidavit of confirmation of deposit of title deeds by the
defendant trust with the 1st plaintiff
Ex.P.7 04.01.2016 Minutes of Board of Trustees of the defendant trust
Ex.P.8 05.01.2016 Letter from the defendant trust requesting additional loan
Ex.P.9 11.01.2016 Confirmation of Loan Balance by the defendant trust
Ex.P.10 29.09.2016 Confirmation of Loan Balance by the defendant trust
Ex.P.11 05.05.2018 Letter of Confirmation of Loan Transactions issued by
Andhra Bank for the transfer of loan amount from the 1st
plaintiff's account to the defendant trust
Ex.P.12 - Statement of Accounts showing the outstanding dues
payable as on 03.06.2016
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Ex.P.13 - Photocopy of computation of Income with
Acknowledgment issued by the Income Tax Department
for the Assessment Year 2017-18.
Ex.P.14 - Photocopy of TDS Certificate in Form-16A for the period
for the period from 01.04.2016 to 30.06.2016
Ex.P.15 - Photocopy of TDS Certificate in Form-16A for the period
for the period from 01.07.2016 to 30.09.2016
Ex.P.16 - Photocopy of TDS Certificate in Form-16A for the period
for the period from 01.10.2016 to 31.12.2016
Ex.P.17 - Balance Sheet as on 31.03.2017 pertaining to the
defendant trust
List of documents marked on the side of the Defendant(s):
Ex.D.1 21.06.2022 Letter of Authorization issued by the defendant trust
authorizing DW1 to give evidence in the case
Ex.D.2 - Online Printout copy of Email (series – 9 Nos.) along
with Certificate issued under Section 65-B of the
Evidence Act.
Ex.D.3 - Statement of Accounts relating to the defendant trust for
the account held with Axis Bank
Ex.D.4 - Statement of Accounts relating to the defendant trust held
for the account held with Bank of Bank of Borada
(Vijaya Bank)
Ex.D.5 - Online Printout copy of Email communication dated
12.07.2017 with interest statement along with Certificate
under Section 65B of the Evidence Act
Ex.D.6 - Online Printout copy of Mail Communication dated
12.07.2017 along with interest statement with Certificate
under Section 65B of the Evidence Act
Ex.D.7 - Statement of Accounts issued by Andhra Bank
Ex.D.8 - Photocopy of the cheques attested by the bank (series –
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Ex.D.9 - Printout of Email Communication dated 27.01.2018
along with letter dated 24.08.2017 with a Certificate
under Section 65-B of The Evidence Act
Ex.D.10 11.06.2019 Legal Notice issued by the plaintiff with postal
Acknowledgment Card
Ex.D.11 11.06.2019 Reply Notice addressed to the counsel for the plaintiff
along with acknowledgment card
Ex.D.12 21.06.2022 Statement of Account of the defendant trust
Ex.D.13 - Printout of Email communication dated 18.12.2017 along
with bills containing 3 sheets with a certificate issued
under Section 65B of the Evidence Act
24..11..2023
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N.SATHISH KUMAR.J.,
kmk
Summary Civil Suit No.413 of 2018
`
24..11..2023
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