Delhi District Court
Sh. Rajiv Kumar Datt vs Sh. Mohinder Singh on 15 April, 2014
IN THE COURT OF ADDL. DISTRICT JUDGE (CENTRAL), DELHI
Suit No: 806/08
M/s S. N. Datt & Sons HUF
(Through its Karta)
Sh. Rajiv Kumar Datt,
S/o Late Sh. Surya Narain Datt,
Office at:-
29, South Patel Nagar,
New Delhi-110008. ...Plaintiff
Versus
Sh. Mohinder Singh,
S/o Late Sh. Amolak Singh,
R/o B-590, Sudershan Park,
New Delhi. ....Defendant
J U D G M E N T:-
Plaint presented on 25.01.2006.
1. The plaintiff HUF has filed the suit for recovery of Rs. 14,28,755/- against the defendant through its Karta Sh. Rajeev Kumar Datt. It is stated that the said Karta of plaintiff and the defendant were well acquainted with each other. In July, 2004, the defendant had taken a loan of Rs. 50,000/- from the plaintiff against loan agreement dated 17.07.2004. He had again sought loan of Rs. 3,80,734/- from the plaintiff which was given to him vide demand draft dated 23.07.2004. The said amount was needed by the defendant for paying part cost of DSIDC Plot No. 52, measuring 100 Sq. yards in Sector-3, Pocket-N, Bawana, Delhi allotted in the name of his proprietorship Mohindra Engineering Works. In order to secure the refund of loan, the defendant had executed an Suit No 806 of 2008 Page No. 1 agreement to sell, GPA, Receipt, Affidavit and Will in favour of the plaintiff on 27.07.2004 on receipt of the demand draft. Further a sum of Rs. 7,94,266/- was taken by the defendant from the plaintiff on 02.12.2004 against promissory note.
2. The defendant was delivered possession of the Bawana Plot by DSIDC on 08.12.2004. The plaintiff had asked him to transfer the possession to it in pursuance of sale documents executed in its favour. The defendant however informed that the plot was not transferable making the plaintiff to demand refund of the entire loan of Rs. 12,25,000/- alongwith interest. The defendant had assured of making payment shortly. Against the said principal amount with interest of 2,03,755/-, the defendant had issued three cheques to the plaintiff comprising the total amount of Rs. 14,28,755/- on 21.12.2004. The first cheque dated 31.12.2004 for Rs. 50,000/- was not presented in the bank by the plaintiff on the request of defendant that he will make its payment alongwith other cheques in the month of June, 2005. On presenting the cheques for encashment well after dates of their maturity, the same were dishonoured due to insufficiency of funds in the defendant's account vide memo dated 27.06.2005. On being contacted, although the defendant had assured to make payment against the dishonoured cheque within a week but failed. Plaintiff then got legal notice dated 20.07.2005 issued to him but since it was forwarded at wrong address, another notice dated 05.10.2005 was sent at the correct address of the defendant of which a false and frivolous reply dated 30.10.2005 was received instead of payment. Hence the suit.
Suit No 806 of 2008 Page No. 23. The defendant has raised a number of preliminary objections against the plaintiff's claim in his written statement. It is stated that there is no privity of contract between the parties nor any cause of action has arisen against the defendant. The suit without impleading Mohindra Engineering Works in whose name, the alleged loan of Rs. 3,80,734/- was given, is not maintainable. The plaintiff himself breach the terms and conditions of agreement to sell by failing to pay the balance consideration, is not entitled to any relief as part consideration paid by him stood forfeited after receipt of legal notice dated 05.10.2005 wherein the plaintiff had adopted the plea of having advanced loan by discarding the factum of sale of plot. Even otherwise the plaintiff had the alternative efficacious remedy to recover the sum of Rs. 4,30,734/- by enforcing clause 8 of the agreement dated 27.07.2004. The three cheques and promissory note were got signed by the plaintiff from the defendant by way of collateral security to ensure that the sale documents of the plot are executed by the latter. It is stated that the decree for Rs. 14,28,755/- has been urged by the plaintiff against alleged loan of Rs. 12,25,000/- without specifying the rate of interest or any agreement in this behalf.
4. On merits, the story of parties being well acquainted with each other is denied. In fact, Sh. Rajeev Kumar had approached the defendant for purchasing his DSIDC plot through property dealer Sh. Krishan Kumar Sharma. The Karta of plaintiff had given an advance of Rs. 50,000/- to the defendant on 17.04.2004 after negotiating the deal for a total consideration of Rs. 12,25,000/- and a bayana receipt was executed by the defendant in this behalf which was given to the Karta of plaintiff. The mediator had further Suit No 806 of 2008 Page No. 3 obtained the signatures of defendant on a loan agreement as a guarantor for his not back tracking from the deal. While refuting that the defendant had further approach the plaintiff for loan, it is stated that a sum of Rs. 3,80,734/- was paid by the plaintiff in pursuance of agreement to sell as draft in the name of proprietorship firm of defendant, to which the plot was allotted was required for making payment. The plaintiff had obtained the signatures of defendant on the set of sell documents on 27.07.2004 before giving him the demand draft of part consideration. It was specifically mentioned in the receipt that balance consideration is to be paid by the plaintiff at the time of execution of sale documents. The defendant was bound to deliver the possession of plot to the plaintiff after getting it transferred in the name of his firm and obtaining necessary permission of the allotting authority. In order to show his bonafide, the defendant had even delivered the original documents of the plot to the plaintiff. It has been denied that purpose of execution of set of sale documents in favour of the plaintiff was to secure the refund of loan amount. The proprietorship of defendant had never approached the plaintiff for taking any loan.
5. The defendant denied having further taken loan of Rs. 7,94,266/- from the plaintiff. In fact, after the execution of set of sale documents, the plaintiff became anxious due to delay in the transfer of plot in the name of firm of defendant which it had expressed to the mediator who, in turn, persuaded the defendant to issue signed undated blank cheques and a promissory note and handover the same to the plaintiff by way of collateral security. The defendant did not perceive any evil motive in the move and Suit No 806 of 2008 Page No. 4 therefore issued three blank cheques and a promissory note to the plaintiff after affixing his signature. The defendant got the possession letter from DSIDC on 08.12.2004 after which the plaintiff had demanded its possession. While denying that he had made any promise to repay the alleged amount of Rs. 12,25,000/- alongwith interest to the plaintiff, it was rather conveyed that the necessary documents will be executed in its favour after execution of title documents by the defendant and on receipt of balance consideration from the plaintiff. The plaintiff however never paid the balance consideration while the defendant was willing to abide by the contractual obligations of agreement dated 27.04.2004. On receipt of legal notice on behalf of the plaintiff, it became clear that it is no more interested in purchasing the plot by making payment of balance consideration of Rs. 7,97,266/-, the defendant forfeited the part consideration till then received by him and asked the plaintiff to return the original documents of the plot. It is averred that the cheques and the promissory note are without any consideration and that the plaintiff has backed out of the deal. The liability to pay interest at any rate to the plaintiff is denied. It is finally urged that the suit of plaintiff is liable to be dismissed.
6. Replication reaffirms the contents of plaint and refutes those of written statement. It is stated that there is no question of impleading the proprietorship when the defendant is already there. There was no question of enforcing the terms of alleged agreement dated 27.07.2004 when the plaintiff had never agreed to purchase the plot to be allotted to the defendant. He could not therefore have forfeited the loan taken from the plaintiff. The issuance of documents in blank by the defendant by way of collateral security Suit No 806 of 2008 Page No. 5 has been denied. It is stated that no mediator was involved between the parties. There was no question of execution of any bayana receipt by the defendant or of delivery of original documents to the plaintiff. The rate of interest is very much mentioned in the loan agreement dated 17.07.2004.
7. On the basis of pleadings, following issues were settled for trial:-
1. Whether the suit is bad for the non-joinder of necessary parties as alleged in preliminary objection no. 2 ?
OPD.
2. Whether the plaintiff has breached the terms and conditions of the agreement to sell dated 27.07.2004 as alleged in preliminary objection no. 3? OPD.
3. Whether the plaintiff is entitled for the decree of recovery of Rs. 14,28,755/- as prayed for ?
OPP.
4. Whether the plaintiff is entitled for the interest pendente lite and future ? If any, at what rate ? OPP.
5. Relief.
8. To substantiate his case, the plaintiff has examined its Karta as PW 1 who has narrated facts and proved the loan agreement dated 22.07.2004 as Ex. PW 1/1, GPA dated 27.04.2007 Ex. PW 1/2, Agreement to sell Ex. PW 1/3, Affidavit Ex. PW 1/4, Receipt Ex. PW Suit No 806 of 2008 Page No. 6 1/5, Will Ex. PW 1/6, Promissory Note dated 02.12.2004 Ex. PW 1/7, Cheque dated 31.12.2004 for Rs. 50,000/- Ex. PW 1/8, Bank Memo Ex. PW 1/9, Copy of Cheque dated 02.05.2005 for Rs. 3,80,374/- Ex. PW 1/10, Bank Memo Ex. PW 1/11, Copy of cheque dated 30.05.2005 for Rs. 9,98,021/- Ex. PW 1/12 and bank memos Mark 'A' & 'B', Copy of legal notice Ex. PW 1/13, Postal Receipt Ex. PW 1/14, UPC Coupon Ex. PW 1/15, Courier receipt Ex. PW 1/16 and reply of defendant Ex. PW 1/17.
Sh. Subhash Chander, Record Keeper of Union Bank of India, Kirti Nagar has proved the two bank memos as Ex. PW 2/1 & Ex. PW 2/2 besides tendering the copy of statement of account Ex. PW 2/3 and return memo Ex. PW 2/4.
PW 3 Sh. Nand Lal, Clerk of Punjab National Bank, Rajender Nagar of copy of deposit slip filled by the account holder/plaintiff as Ex. PW 3/1 and copy of statement of said account Ex. PW 3/2.
PW 4 Sh. Anis Rastogi, claimed to have given a friendly loan of Rs. 1,35,000/- to the Karta of plaintiff on 22.07.2004 which he had not refunded to the witness till then.
PW 5 Smt. Amarjeet Kaur, has similarly advanced a sum of Rs. 1,95,000/- to Sh. Rajeev Kumar Datt in cash on 01.12.2004 on friendly terms which were not refunded to her. Plaintiff had closed its evidence on 07.05.2008.
9. On his part, the defendant has examined himself and stated his case by way of affidavit wherein show-cause notice dated 01.12.2005 is proved as DW 1/1. Sh. Krishan Kumar Sharma has been examined as DW 2 whereafter the defendant had closed his evidence on 20.01.2009.
Suit No 806 of 2008 Page No. 710. I had heard arguments on behalf of the parties and carefully perused the written synopsis of the defendant as well as the judicial record.
11. It has been argued on behalf of the plaintiff that collateral security by executing documents Ex. PW 1/2 to Ex. PW 1/6 in respect of his Bawana plot was furnished by the defendant in furtherance of loan agreement Ex. PW 1/1 as no date of return of loan amount was fixed between the parties. It is claimed that there is no allegation of cheques having not been delivered to the plaintiff after being signed in blank. DW 2 remained stoically silent in this behalf. His presence as mediator of the deal does not find mention in reply to the legal notice. The defendant had admittedly signed the documents in respect of his immovable property at behest of the mediator. There is material shift in the stand of the defendant from reply to legal notice to the written statement. The defendant having taken the risk of issuing blank signed cheques and promissory note cannot find fault with others. Section 20 of The Negotiable Instruments Act has been referred in this behalf. It is also averred that no suggestions has been given to PW 4 to not having extended the loan to the plaintiff. The defendant did not have a legal right in the industrial plot at Bawana in July, 2004. He was therefore no competent to enter into a deal for the same. There is also nothing to perceive the forfeiture of loan amount by the defendant in reply to the legal notice. The three cheques for different numbers which could not have been delivered by the defendant in July, 2004 itself.
Suit No 806 of 2008 Page No. 812. On behalf of the defendant, it is argued that no purpose of alleged loan which had substantially enhanced gradually has been disclosed. The terminology of loan agreement Ex. PW 1/1 is in fact a bayana receipt. The clauses of documents Ex. PW 1/2 to Ex. PW 1/6 actually will reveal the nature of transaction between the parties. Since the plaintiff failed to pay the balance sell consideration of the industrial plot to the defendant, part consideration received from it till then was forfeited while refuting the payment of Rs. 7,94,266/-, the defendant is amazed that no receipt thereof was produced. However this amount was to be paid on the date of finalization of the deal of industrial plot. The conduct of plaintiff in asking for possession of industrial plot from the defendant on 20.12.2004 in stead of demanding money reflects his real stage of mind. The cheque of Rs. 3,80,234/- had been drawn in favour of DSIDC by the plaintiff visibly showing that his paramount intention was to project the industrial plot of defendant. It is found strange that the plaintiff after fetching the loan amount from PW 4 and PW 5 had given it to the defendant without settling any terms regarding payment of interest. No suggestion was given to DW 1 regarding loan transaction between the parties. All the documents Ex. PW 1/2 to Ex. PW 1/6 were drafted by the plaintiff himself on which defendant was a witness. No suggestion of payment of Rs. 7,60,266/- was given to DW 1 nor that the cheques were given by him in discharge of loan. It is stated that the basis of calculation of transaction of interest to arrive at a figure of about Rs. 2 lacs has been disclosed particularly when there is no agreement between the parties in this behalf.
13. The issue-wise findings of court are recorded hereunder:-
Suit No 806 of 2008 Page No. 914. Issue No. 1:-
The defendant has taken an objection that the suit is liable to be dismissed due to non-joinder of M/s Mohindra Engineering Works in whose name the sum of Rs. 3,80,734/- had allegedly been given as loan vide demand draft. The plaintiff has repelled it by submitting that when the defendant is there, there is no question of impleading his proprietorship concern. Outrightly the presentation of the plaintiff in this behalf is found convincing. Proprietorship is only a fictitious name under which the proprietor is carrying on his business. Where the proprietor himself is impleaded, since he is representing his proprietorship as well, impleadment of latter will only duplicate the party without serving any fruitful purpose. The defendant cannot claim that he has an identity distinct from his proprietorship concern and thus seek to implead latter. The issue is answered in negative.
15. Issue No. 2:-
15(a) Just by putting forth long acquaintance with the defendant the Karta of plaintiff claims to have extended friendly loan to the defendant. Despite stiff opposition of the defendant of even knowing the plaintiff before hand, PW 1 did not deem it fit to give some details of their alleged friendship. No independent witness who may have seen the suit parties together for a long time has been examined. DW 2, with whom also the PW 1 claimed friendship, did not corroborate his stance about the defendant. Further had there been a genuine friendly relationship between the parties, the plaintiff would not have become jittery in extending loan to the defendant as to secure it by getting multiple layers of Suit No 806 of 2008 Page No. 10 documents. No element of the parties maintaining a friendly relationship could be perceived from the facts of the case.
15(b) It was not a simple loan transaction between the parties as the plaintiff has tried hard to project. The very first document Ex. PW 1/1 reveals the true intent behind the deal. Besides its execution on 22.07.2004, the defendant is shown to have executed another loan agreement dated 17.07.2004 containing the detailed terms and conditions besides executing demand promissory note and receipt of having taken Rs. 50,000/- from the plaintiff. Those documents have not been produced on the record of this case. The defendant was also made to give a cheque no. 038080 by way of collateral security to ensure refund of said amount. Primarily, document Ex. PW 1/1 defined as 'loan agreement' reflects that it was to bind the defendant that he will sell the 100 Sq. meter industrial plot no. 52, Sector 3, Block-N, Bawana to be allotted by Delhi State Industrial Development Corporation Ltd. to his proprietorship, on the terms and conditions to be settled by the parties amicably in due course. The 'loan' of Rs. 50,000/- was without interest on the deal of plot being carried through by the parties but was to become subject to interest at the rate of 15% per annum on the failure of defendant to execute the sale documents of said plot in favour of plaintiff. The copy of allotment letter and other relevant documents of the plot were delivered by the defendant to the plaintiff at the time of execution of this instrument.
15(c) In furtherance of the understanding contained in Ex. PW 1/1, as the proprietorship of the defendant had already received Suit No 806 of 2008 Page No. 11 demand cum allotment letter dated 07.05.2004 and the premium was to be deposited at the rate of Rs. 4,200/- per sq. meter within 60 days, the parties apparently finalized negotiations about the terms and conditions of transfer of plot to the plaintiff within a matter of next four days and the defendant executed GPA, agreement to sell, affidavit, receipt and Will Ex. PW 1/2 to Ex. PW 1/6 in respect of his industrial plot in favour of the plaintiff. The plaintiff had got a pay order prepared in the name of DSIDC for a sum of Rs. 3,80,734/- on behalf of the proprietorship of the defendant and deposit of the same in compliance of the demand.
The total sale consideration of the plot was settled between the parties at Rs. 12,25,000/-. The receipt made it clear that the balance consideration of Rs. 7,94,266/- was to be paid by the plaintiff at the time of execution of sale documents. The entire set of documents was got attested from Notary Public. The effort of the plaintiff to distinct from these documents on the plea that none of them is registered is futile as the final sale documents of the plot was to be executed by the defendant on receipt of balance consideration. The understanding of the parties contained in Ex. PW 1/1 thus got merged/renovated in the set of documents executed after five days.
15(d) The Karta of plaintiff himself had drafted the documents Ex. PW 1/3 to Ex. PW 1/6 yet defiantly claims to have no talks at any time with defendant about purchase of the plot. He had tried to wriggle out of his admission in pleadings and affidavits by saying that he had never asked for the possession of the plot from the defendant. PW 1 admitted having lodged two complaints against the defendant with DSIDC, copies whereof have not been produced Suit No 806 of 2008 Page No. 12 in this case, claiming to have already purchased the plot from defendant. He tried to explain that the complaints were lodged after coming to know of the defendant having sold the plot to some other person. Had he not been concerned with the plot, he would not have gone to the extent of making complaints to DSIDC against the defendant in respect thereof. PW 1 also denied that all the original documents of plot were handed over to him by the defendant but failed to explain the reason of so mentioning in agreement Ex. PW 1/3. Interestingly, he did not call upon the defendant in writing to make the matter clear. The entire set of documents thus goes to show that it was a property deal between the parties. The plaintiff however changed track on realizing that the plot allotted to the defendant is not transferrable.
15(e) So far as the claim of plaintiff of having paid the balance consideration of Rs. 7,94,266/- to the defendant is concerned, no document has been produced to show the availability of such funds with HUF or its karta. Had it been a loan transaction, the amount would have been in round figure in stead of odd amount. The plaintiff who had been getting multiple documents executed by the defendant with even smaller amounts would not have restricted to just getting a pronote Ex. PW 1/7 executed by him. He would certainly have insisted on the defendant to execute the proper sale documents of the plot in its favour and get them registered. The accounts of HUF have been withheld even its income tax returns reflecting the sum of Rs. 7,94,266/- as loan to the defendant have not been produced. PW 1 claimed to have withdrawn a sum of Rs. 3,00,000/- from his account. When the entire consideration had been disclosed in agreement Ex. PW 1/3, the reason of making Suit No 806 of 2008 Page No. 13 balance payment to the defendant in cash is not understandable. The two witnesses PW 4 & PW 5 have also not produced any documentary evidence to show having extended any monetary help to PW 1 in July and December, 2004 respectively. Despite been professional Chartered Accountants none of them claimed to have initiated any steps for recovery of alleged loan from PW 1 within the period of limitation.
15(f) The defendant on his part has proved himself to be easily gullible person who went on to execute valuable security documents at the asking of PW 1 and/or the mediator, DW 2. Only because of his such attitude he has been entangled in the suit.
15(g) The sum and substance of above discussions is that the plaintiff has utterly failed to distinct itself from documents Ex. PW 1/2 to Ex. PW 1/6 and their natural intact. Further it has miserably failed to substantiate the payment of Rs. 7,94,266/- to the defendant against pronote Ex. PW 1/7 and cheque Ex. PW 1/12. Admittedly the defendant had obtained possession of the plot on 08.12.2004, a highly conscious person like plaintiff would not have made payment of balance consideration to the defendant before that date or beyond the term no. 3 contained in agreement to sell. The plaintiff however cannot be said to have manifestly breach the terms of said agreement Ex. PW 1/3. The issue is answered accordingly.
16. Issue no. 3:-
The defendant claims to have forfeited the amount till then received from the plaintiff against the plot on its failure to pay the Suit No 806 of 2008 Page No. 14 balance consideration. The documents however do not contain any forfeiture clause. The coercive measure required to have been specifically agreed to by the parties. The defendant could not have unilaterally invoked it. Admittedly, the plot was sold by him to Mr. Ramesh Batra for a sum of Rs. 10,25,000/-. He has not claimed the difference of consideration of Rs. 2 lac from the plaintiff nor has filed counter-claim in this behalf. The amount actually received by him from the plaintiff i.e. Rs. 4,30,734/- is liable to be refunded. The issue is decided accordingly.
17. Issue No. 4:-
Having superseded agreement Ex. PW 1/1 by executing set of documents five days latter, the plaintiff cannot rely upon the term of rate of interest contained in it. Even otherwise the failure to execute sale documents of the plot cannot be attributed to the defendant. Nevertheless, the defendant having utilized the amount of plaintiff at crucial time, is liable to pay reasonable compensation in the shape of interest which in the facts and circumstances of the case is deemed equitable at the rate of 9% per annum w.e.f. 01.08.2004 till the date of filing of the suit and at the same rate on cumulative amount till realization. The issue is decided accordingly.
18. Issue No. 5:-
In the light of above findings, the suit is decreed in the favour of the plaintiff and against the defendant in the sum of Rs. 4,30,734/- with interest at the rate of 9% per annum from 01.08.2004 till penultimate day of filing of the suit. The plaintiff shall further be entitled to interest at the same Suit No 806 of 2008 Page No. 15 rate on the cumulative amount from the date of filing of the suit till realization. The plaintiff having tried to play to the gallery through its karta who had appeared as PW 1 is denied costs of the suit.
Decree sheet be accordingly prepared. File be
consigned to Record Room.
Announced in the open court
on 15th April, 2014. (Sunil K Aggarwal)
Addl. District Judge (Central)-10
Delhi
Suit No 806 of 2008 Page No. 16