Bangalore District Court
Dinesh Kumar M K vs Jagadish R on 29 February, 2024
KABC010028512020
IN THE COURT OF THE XLI ADDL.CITY CIVIL AND SESSIONS
JUDGE : AT BANGALORE [CCH-42]
:PRESENT:
SMT. SUMANGALA CHAKALABBI, B.A. LL.B. (Hons.), LL.M.
XLI Addl. City Civil and Sessions Judge,
Bengaluru
Dated this the 29th day of February 2024
O.S.No.730/2020
PLAINTIFF : Sri Dinesh Kumar.M.K,
S/o. Mr.Krishnamurthy.M,
Aged about 46 years,
Residing at: No.1577-19/2,
5th "A" Cross,
Mysore Bank Colony,
Bangalore 560 050.
PAN No: AGUPK0397E
(By Sri I.Gopalakrishna,
Advocate)
V/s.
DEFENDANT : Sri.R.Jagadish,
S/o.Late.Mr.S.Rajashekaraiah,
Aged about 46 years,
OS No.730/2020
2
No.10, Hosakerehalli,
Behind Basavana Temple,
Banashankari 3rd Stage,
Bengaluru - 560 085.
(By Sri A.N.Narayana Swamy,
Advocate)
Date of Institution of the Suit: 28.01.2020
Nature of the suit
(Suit on Pronote, suit for Money Suit
declaration & possession, suit for
injunction)
Date of commencement of 27.06.2023
recording of evidence:
Date on which the Judgment was 29.02.2024
pronounced:
Total Duration: Year/s Month/s Day/s
04 01 01
JUDGMENT
The plaintiff has filed this suit against the defendant for recovery of a sum of Rs.16,31,250/- together with interest at 18% p.a., and also to direct the sale of the Mortgaged Schedule Property and to direct the payment of sale proceeds to the plaintiff from the date of suit till the realization.
2. The brief facts of the case of the plaintiff are :
OS No.730/2020 3 2.1 The plaintiff is a business man. The defendant is also business man and both are known to each other from several years. On 28.08.2012 the defendant herein took a hand loan amount of Rs.5,00,000/- from him for the purpose of his family legal necessities and for his business purposes. And as a security towards the said hand loan the defendant has created the charge over the title deeds in respect of the property bearing No.10, Khatha No.20, situated at Hosakerehalli Village, now coming within the jurisdiction of BBMP, Bangalore measuring East to West 40 feet and North to South 34.1/2 feet admeasuring 1380 sq.feet along with the building thereon in favour of the plaintiff as more fully described in the schedule hereunder and hereinafter called as "schedule property" as per registered Mortgage by deposit of title deed dated 28.08.2012. The said Registered Mortgage by deposit of Title Deeds dated 28.08.2012 is registered as document No.BSG-1-02800-2012-13, recorded in C.D.No.BSGD177.
2.2 The defendant herein again on 02.09.2016 has requested him to give an additional hand loan of Rs.5,00,000/- for OS No.730/2020 4 the aforesaid same purposes. Accordingly, the plaintiff on good faith has given an additional hand loan of Rs.5,00,000/- to the defendant on 02.09.2016. And as a security towards the said additional hand loan of Rs.5,00,000/- the defendant has extended the charge over the Title Deed in respect of the aforesaid schedule property as per the Registered Mortgage by deposit of Title Deeds dated 02.09.2016 registered as document No.BSG-1-
03465-2016-17, recorded in C.D.No.BSGD299 dated 02.09.2016, registered in the office of Sub-Registrar Basavanagudi Bangalore. While taking the said hand loan amounts from the plaintiff, the defendant has agreed to repay the said hand loan amounts along with interest at the rate of 18% p.a. (i.e., 1.5% p.m) with other incidental charges to him.
2.3 The defendant has agreed to repay the said hand loan amount of Rs.10,00,000/- along with interest at the rate of 18% p.a. with other incidental charges within a period of 24 months from the date of the said registered mortgage by deposit of Title Deeds dated 02.09.2016 i.e., on or before 02.09.2018 without fail. Further as security towards the said hand loan amounts the defendant has executed an On Demand Promissory OS No.730/2020 5 Note with consideration receipt dated 02.09.2018. However the defendant has failed to repay the principal loan amount or its agreed rate of interest. In the first week of November 2019, the defendant has issued the cheque bearing No.308053, dated.12.11.2019 towards the repayment of principal amount of Rs.10,00,000/- and another cheque bearing No.893070, dated 12.11.2019 towards the payment of part-interest as on 02.09.2018 on the said hand loan amount for a sum of Rs.3,60,000/- respectively both drawn on Karnataka Bank Limited, Banashankari 3rd stage, Bangalore in favour of the plaintiff.
2.4 The defendant has assured him that, he will keep sufficient funds in his account before the date of its presentation. The plaintiff has presented the said cheques for doing RTGS through the defendant's Banker viz., Karnataka Bank Limited, Banashankari 3rd Stage, Bangalore to the plaintiff's account with his banker i.e.,the State Bank of India and it is unpaid/disnored as per the defendant's Bankers' Endorsement dated 17.01.2020 respectively for the reasons of "Account closed on 16.01.2020". The plaintiff has initiated separate Criminal proceedings against OS No.730/2020 6 the defendant for the offence committed by him U/sec.138 and 142 of the Negotiable Instruments Act.
2.5 The defendant has failed to repay him the principal amount of Rs.10,00,000/- and the agreed rate of interest at 18% from 02.09.2016. The defendant has taken the said hand loan for his family legal necessity and for the business purposes. Therefore, the defendant is liable to pay interest at the rate of 18% p.a. Hence, the defendant is liable to pay to the plaintiff as under:
Sl. Description Amount In Rs.
No.
1. Hand Loan amount Rs.10,00,000
(i.e., 5,00,000/- +
5,00,000/-
2. Agreed interest @ 18% p.a. on the principal amount of Rs.10,00,000/- from 02.09.2016 to till the date of filing of the suit. Rs.6,31,250/-
Total Rs.16,31,250/-
2.6 Hence, the defendant is liable to pay the plaintiff a sum of Rs.16,31,250/- as calculated as on filing of the above suit. The plaintiff submits that, while borrowing the said hand loan, the defendant has agreed to pay back the hand loan amount as per the terms agreed with him without any default.
OS No.730/2020 7 2.7 The plaintiff submits that, the defendant herein has failed and neglected to pay the principal amount or its agreed up to date interest, inspite of the repeated demands, reminders and requests. The plaintiff has got issued a Legal Notice dated 12.12.2019 calling upon the defendant for payment of the principal amount and its agreed interest by way of Registered Post Acknowledgment Due and by way of DTDC Courier. The Legal Notice issued to the defendant by way of RPAD has returned back with an endorsement that of Insufficient Address but the Notice sent by way of Courier has been duly served to the defendant. After receipt of the said Legal Notice the defendant herein has sent a Reply Notice dated 20.12.2019 by requesting the plaintiff to settle the issue amicably by admitting the claim of the plaintiff.
2.8 The cause of action for the suit arose on 28.08.2012 when the defendant has taken hand loan of Rs.5,00,000/- from the plaintiff by creating the charge over his title deeds in respect of the schedule property as per registered Mortgage by deposit of Title Deeds dated 28.08.2012 by handing over the Original Title Deeds to the custody of plaintiff, when on 02.09.2016 the OS No.730/2020 8 defendant has taken again an additional hand loan of Rs.5,00,000/- from the plaintiff by extending the charge over his Title Deeds over the suit schedule property by way of regbistered Mortgaged by Deposit of Title Deeds dated 02.09.2016, when the defendant has executed an On Demand Promissory Note with consideration receipt dated 02.09.2018 by promising to pay the aforesaid total hand loan of Rs.10,00,000/- along with interest at the rate of 18% p.a. to the plaintiff, when the defendant has issued the cheque bearing No.308053, dated 12.11.2019 for a sum of Rs.10,00,000/- towards the repayment of the principal hand loan amount, when the defendant has issued another cheque bearing No.893070, dated 12.11.2019 for a sum of Rs.3,60,000/- towards the payment of the part interest respectively in favour of the plaintiff, when the both cheques bounced as per the Bankers' endorsements dated 17.01.2020 that, "Account Closed on 16.01.2020" when the defendant has failed and neglected to repay the aforesaid principal hand loan amount and its accrued interest at 18% p.a., when on 12.12.2019 the plaintiff has issued a Legal Notice through his Advocate by demanding for payment of the said Principal Hand loan amount of Rs.10,00,000/- along with OS No.730/2020 9 interest at the rate of 18% p.a. from 02.09.2016, when on 20.12.2019 the defendant has sent a Reply Notice through his Advocate by admitting notice claim amount and by requesting for settlement of the issue by amicably.
3. After the institution of the suit, the suit summons was served on the defendant. The defendant in response to the suit summons appeared before the court through counsel and filed his written statement.
3.1 The defendant in his written statement which has the following contentions:
3.2 The suit as filed is not maintainable either in law or on facts. Hence, it is liable to be dismissed in limine. The defendant has admitted the execution of the mortgage deeds dated 28.8.2012 and submitted that he was very regular and prompt in paying the monthly installments at the rate of 12% p.a upto date, and further the plaintiff had paid additional loan of Rs.5,00,000/- on 02.09.2016 and has extended the charge over the Title Deed in respect of the suit schedule property by way of OS No.730/2020 10 Registered Mortgage. The further averments made in the plaint that the defendant had agreed to pay the interest at the rate of 18% per cent (i.e., 1.5% per month) and other incidental charges is not all admitted by this defendant.
3.3 The case of the plaintiff that the defendant has agreed to repay the said loan amount of Rs.10,00,000/- along with interest at the rate of 18% p.a, with other incidental charges within a period of 24 months i.e. on or before 02.09.2018 and in furtherance of the same the defendant has executed the On Demand Promissory Note with consideration receipt on 02.09.2018 is emphatically denied by the defendant. The further averments that in the 1st week of November 2019 the defendant has issued cheques bearing No.308053 dated 12.11.2019 towards the repayment of the Principal amount of Rs.10,00,000/-
and another cheque bearing No.893070 dated 12.11.2019 towards the payment of interest as on 02.09.2018 drawn on Karnataka Bank, Banashankari Bangalore is emphatically denied by the defendant. The defendant submits that at the time of first mortgagte on 28.08.2012 the defendant has handed over the above mentioned blank cheques and blank On Demand OS No.730/2020 11 Promissory Notes with the signatures of the defendant and the said instruments have been misused by the plaintiff.
3.4 The contention of the plaintiff that the defendant had assured he will keep sufficient fund in his account and the said cheques when presented by the plaintiff at State Bank of India, the defendant's banker has issued an endorsement on 17.01.2020 that the account has been closed is not within the knowledge of this defendant. The defendant is liable to pay principal of Rs.10,00,000/- and the agreed rate of interest at 18% from 02.09.2016 till the filing of the suit and the defendant is liable to pay a sum of Rs.16,31,250/- is not at all admitted by this defendant. This defendant submits except the principal amount rest of the allegation with regard to the rate of interest, date stated to have been due and the amount mentioned in the cheques are totally denied by the defendant. The defendant has submitted that the defendant was ready to pay a sum of Rs.10,00,000/- towards principal amount, as he has already paid the entire interest till the end of September 2019 at the rate of 12% p.a. 3.5 The plaintiff had issued a Legal Notice dated 12.12.2019 calling upon the defendant for the payment of the OS No.730/2020 12 principal amount and interest and in this regard the defendant has contended that in spite of replying to the said notice the plaintiff has issued one more notice on 12.12.2019 in respect of the old outdated cheques and blank On Demand Promissory Notes only as an after thought to pressurize this defendant and if at all he have given the cheque towards the Mortgage amount he would have at least made endorsement on the Mortgage Deed or some acknowledgement would have been entered upon. The act of the plaintiff clearly shows that he has misused the documents and filed cases and issued false notices.
3.6 It is further contended that the schedule property was inherited by this defendant through a Registered Partition Deed dated 05.09.2003. Hence this defendant alone does not have absolute right to Mortgage or encumber the schedule property, as the same is ancestral property. With these contentions the defendant sought to dismiss the suit.
4. In view of the contentions raised by the plaintiff and the Defendant, the following Issues have been framed by my Predecessor-in-Office:
OS No.730/2020 13 ISSUES
1. Whether the plaintiff proves that he had extended an additional loan of Rs.5,00,000/ to the defendant on 02.09.2016 and pursuant to the same he had further extended the charge over the title deed in respect of the suit schedule property as per the registered mortgage deed by deposit of title deeds dated 02.09.2016.
2. Whether the Plaintiff proves the execution promissory note dated 02.09.2018 by the defendant.
3. Whether the Plaintiff proves that by virtue of the on demand promissory note dated 02.09.2018 the defendant had agreed to repay the hand loan amount of Rs.10,00,000/ along with interest @ 18% per annum with other incidental charges within period of 24 months from the date registered mortgage deed by deposit of title deeds dated 02.09.2016.
4. Whether the Plaintiff proves that on his failure to re pay the loan amount as agreed earlier he had issued the cheque bearing No. 308053 dated 12.11.2019 towards the re payment of the principal amount of Rs.10,00,000/ and cheque bearing No. 893073 dated 12.11.2019 towards the payment part interest as on 02.09.2018 drawn on Karnataka Bank Limited, Banashankari 3rd stage, Bengaluru.
5. Whether the Plaintiff proves that the cheques issued by the defendant came to be returned with an endorsement ' Account closed on 16.01.2020' in spite of the assurance of the defendant but he will sufficient funds in his account before its presentation.
6. Whether the Plaintiff proves that the defendant is liable to pay Rs.16,31,250/ till the date of suit
7. Whether the plaintiff is entitled to the reliefs sought for OS No.730/2020 14
8. What order or decree?
5. In order to prove the case, the plaintiff examined himself as PW.1 and got marked documents at Ex.P.1 to Ex.P. 30 and closed his side.
5.1 From defendant side, the Defendant examined as DW.1. and got marked no documents.
6. Heard the arguments of both sides. Perused the records.
7. My answer to the above issues are as under:
Issue No. 1 : Partly in the Affirmative
Issue No. 2 : In the Affirmative
Issue No. 3 : In the Negative
Issue No. 4 & 5: In the Affirmative
Issue No. 6 : As per the final order
for the following:
:NOTE :
8. The issue no.1 as framed by this court does not cover the contention of the plaintiff indicating the liability of the OS No.730/2020 15 defendant to pay the total amount of Rs.10,00,000/- together with interest @18% from the date of registered mortgage deed by deposit of title deeds dated 02.09.2016. Thus the issue no.1 is recasted in the following manner:
Recasted issue no.1 :
"Whether the plaintiff proves that he had extended an additional loan of Rs.5,00,000/- to the defendant on 02.09.2016 and pursuant to the same he had further extended the charge over the title deed in respect of the suit schedule property as per the registered mortgage deed by deposit of title deeds dated 02.09.2016 and the defendant had agreed to repay the sum of Rs.10,00,000/- together with interest @ 18% from the date of registered mortgage deed by deposit of title deeds dated 02.09.2016."
9. Issue no.1 is recasted and amended by keeping in mind the pleadings of the parties and the fact that the parties have already led evidence as if the issue regarding the principal sum and interest was covered under issue no.1 . The issue is recasted by amending it in the exercise of power under Order 14 Rule 5 CPC which empower the court to amend the issues at any stage of the suit before judgement to determine the OS No.730/2020 16 controversy between the parties. The recasted issue would not in any way curtail or prejudice the rights of the parties.
REASONS
10. Issue No.1 -It is the case of the plaintiff that on 28.08.2012 the defendant had obtained handloan of Rs.5,00,000/- to meet his family necessity and business purpose and as security towards the handloan the defendant had created charge over the suit property by a registered mortgage deed of deposit of title deeds in respect of property bearing No.10 Katha No.20 situated at Hosakerehalli Village Uttarahalli Hobli, Bangalore South Taluk as per the Registered Mortgage by deposit titled deeds dated 28.08.2012. Accordingly, the defendant had deposited the original Registered partition deed dated 05.09.2003 Encombrance Certificate dated 31.01.2001 and Encumbrance Certificate dated 22.08.2012 along with the Original RTC Extract was deposited with the plaintiff. It is the further stated that the defendant had again approach the plaintiff on 02.09.2016 and had requested him to given an additional hand loan of Rs.5,00,000/- for the aforesaid purpose towards the hand loan amount by OS No.730/2020 17 extending the charge over the title deed and pursuant to the same another registered Mortgage Deed by deposit of Title Deeds dated 02.09.2016 was executed and in this context the defendant had agreed to repay the said loan amount along with interest at the rate of 18% with other incidental charges to him. It is further stated by the plaintiff that defendant had agreed to repay the said loan within the period of 24 months from the date of execution of the Registered Mortgage Deed and consequently he had executed as On Demand Promissory Note with Consideration Receipt on 02.09.2018 as a security agreeing to pay the sum of Rs.10,00,000/- at the rate of 18% p.a. and the defendant had failed to repay the amount and as a result the defendant in the first week of November 2019, had issued a cheque bearing No.308053, dated 12.11.2019 towards the repayment of principal amount of Rs.10,00,000/- and another cheque bearing No.893070, dated 12.11.2019 towards the payment of part- interest as on 02.09.2018 on the said hand loan amount for a sum of Rs.3,60,000/- and the said cheques when presented for doing RTGS through the defendant's Banker viz., to the plaintiffs' account were returned with Endorcement as "Account Closed on OS No.730/2020 18 16.01.2020". Thus the defendant is liable to pay a sum of Rs.10,00,000/- at the rate of 18% on the principal amount of Rs.18,00,000/- from 02.09.2016 till the date of the suit i.e. Rs.16,31,250/-.
11. It is further contended that the plaintiff had issued Legal Notice dated 12.12.2019 calling upon the defendant to pay the amount and the defendant issued Reply Notice dated 20.12.2019 requesting the plaintiff to settled the issue amicably. While the defendant in his written statement has admitted the execution of Registered Mortgage deed dated 28.08.2012 and 02.09.2016. But has denied that he had agreed to pay interest at the rate of 18% under the Second Mortgage Deed dated 02.09.2016.
12. The defendant has further denied the execution of On Demand Promissory Note with Consideration receipt on 02.09.2018 and issuance of cheque bearing No.308053 and 893070 dated 12.11.2019 respectively towards payment of principal amount and interest in this context defendant has specifically contended that the defendant had handedover blank OS No.730/2020 19 cheques and blank Promissory Notes at the time of the first mortgage on 28.8.2012 and the plaintiff has misused the old cheque which is out dated for the purpose of this case.
13. Further contended that the endorsement issued by this Banker though the plaintiff's account has been closed is not within the knowledge of this defendant as the account of the defendant was in operative since 2013; the defendant has specifically denied his liability to pay the sum of Rs.16,31,250/- and has stated that except the principal amount the defendant cannot be held liable with regard to the rate of interest.
14. The plaintiff in support of his case as produced the following documents in support of his case as Ex.P.1 to Ex.P.28. Original registered mortgage deed by deposit of title deed dated 28.08.2012 is marked as Ex.P. 1. Original Registered partition deed dated 05.09.2003 is marked as Ex.P. 2. Certified copy of an EC from 01.04.1997 to 31.03.2004 is marked as Ex.P. 3. Certified copy of EC from 01.04.2004 to 21.08.2012 is marked as Ex.P. 4. RTC extract as on 22.08.2012 is marked as Ex.P. 5.Original registered mortgage deed by deposit of title deed dated OS No.730/2020 20 02.09.2016 is marked as Ex.P. 6. Legal notice dated 12.12.2019 is marked as Ex.P. 7. Copy of the Postal receipt is marked as Ex.P.
8. Returned RPAD envelop containing notice is marked as Ex.P.9 and notice therein is marked Ex.P. 9(a). Courier receipt is marked as Ex.P.10. Reply notice dated 20.12.2019 is marked as Ex.P.11. Certified copy of On demand promissory note dated 02.09.2018 along with consideration receipt is marked as Ex.P.12. Certified copy of cheque bearing No. 308053 is marked as Ex.P.13. Certified copy of memo issued by Karnataka Bank dated 17.01.2020 is marked as Ex.P.14. Certified copy of cheque bearing No. 893070 is marked as Ex.P.15. Certified copy of bank memo issued by Karnataka Bank dated 17.01.2020 is marked as Ex.P.16. Certified copy of Legal notice issued by plaintiff is marked as Ex.P.17. Courier receipt dated 18.01.2020 is marked as Ex.P.18. Postal receipt is marked as Ex.P.19. Postal acknowledgement is marked as Ex.P.20. Reply notice issued by defendant is marked as Ex.P.21. Certified copy of Bank challen dated 08.01.2020 is marked as Ex.P.22. Certified copy of Bank challen dated 17.01.2020 is marked as Ex.P.23. Certified copy of Bank challen dated 17.01.2020 is marked as Ex.P.24. Certified OS No.730/2020 21 copy of return memo report dated 10.01.2020 is marked as Ex.P.25. Certified copy of return memo report dated 10.01.2020 is marked as Ex.P.26. Certified copy of of legal notice issued by plaintiff is marked as Ex.P.27. Certified copy of Reply notice issued by defendant is marked as Ex.P.28.
15. From the above narration of facts it is evident that the defendant has not raised any dispute with reference to the mortagage deed at EX.P1 and Ex.P6 in his written statement. DW1 himself has admitted his signatures at EX.P1(a) and EX.P6(a) at the Registered mortgage deeds at EX.P1 and Ex.P6 and thus confirmed his liability of Rs.10,00,000/- under Ex.P.1 Registered Mortgage Deed by deposited at Title Deeds and Ex.P.1 and Ex.P.6 dated 28.8.2012 and 2.9.2016 respectively. However the defendant has disputed his liability to pay interest at the rate of 18% under the Second Mortgage Deed. Upon perusal of Ex.P.1 and Ex.P.6 it is evident Ex.P.6 was executed for an additional sum of Rs.5,00,000/- wherein the Mortgagor/defendant had agreed that in the event he fails to repay the principal amount of Rs.10,00,000/- along with interest thereon within the stipulated OS No.730/2020 22 period of 24 months and failing which the mortgagee shall be at the liberty to recover the said sum through Court of law and the expenses incurred therein by the mortgagee shall have to be borne by the mortgagor. On a careful scrutiny of Ex.P.6 it is found that no specific rate of interest has been mentioned in Ex.P.6 while under Ex.P.1 the mortgagor had agreed that in the event the mortgagor fails to repay the principal amount of Rs.5,00,000/- within the stipulated period i.e., 18 months from the date of Ex.P.1 the mortgagee shall be at liberty to recover the said sum through Court of law together with the sum of Rs.5,00,000/- as on damages. Neither under Ex.P.1 nor under Ex.P.6 there is any specific recital recording the liability of the defendant towards the specific rate of interest to be paid by the mortgagor and this fact has been clearly admitted by the plaintiff/PW1 during his cross examination. A mere mention of the word interest at Ex.P.6 does not establish that plaintiff is entitled to an interest at the rate of 18% as pleaded in the plaint. The plaintiff has issued legal notice at EX.P7 claiming the mortgage amount with interest @18% at EX.P7 but legal notice does not create any right unless rights are protected under the instrument.
OS No.730/2020 23 Section 92 of the Indian Evidence Act provides that when the terms of any contract have been reduced to a form of document no evidence of any oral agreement or statement shall admitted as between the parties to the document for the purpose of varying ,contradicting adding or taking from its terms. Therefore, in the absence of the plaintiff making out his case under the exceptions of Section 92 of Indian Evidence Act and in the absence of cogent and reliable evidence this court cannot hold that the plaintiff is entitled to recover the money secured under EX.P6 together with the interest at the rate of 18% from the date of execution of Ex.P6.
16. Therefore, though the plaintiff has proved that he has extended an additional loan of Rs.5,00,000/- to the defendant under Ex.P.6 by extended charge under Ex.P.1 in respect of the suit schedule property. But the plaintiff has failed to prove the liability of the defendant to pay interest at the the rate of 18% as stated in the plaint. Accordingly, issue No.1 is answered Partly in the Affirmative .
OS No.730/2020 24
17. Issue Nos. 2 and 3 : To avoid repetition of facts and considering the string of events narrated by the plaintiff in his plaint this court is of the opinion that all these issues have to be discussed at one stretch. It is the case of the plaintiff that the defendnat had executed an on demand promisory note and consideration receipt at EXP12 as security to the registered mortgage deed dated 2.9.2016 at EX.P6 and had agreed to pay the loan amount of 10,00,000/- with interest at the rate of 1.5% p.m. Per contra the defendant has specifically denied the execution On Demand Promissory Note at Ex.P.12 .
18. During the course on Cross-examination of defendant/DW1 he has identified signature on Promissory Note at Ex.P.12 and is signatures has marked as Ex.P.29 and Ex.P.30 and he has admitted that the interest mentioned at Ex.P.12 is 1.5% per month on the principal amount of Rs.10,00,000/-. DW.1 has stated that EX.P12 is not in his hand writing but further admitted that he has not giving any complaint with respect of misuse of his signatures at EX.P29 and P30 on EX.P12 on Promisory note. In this context the Learned counsel for the plaintiff OS No.730/2020 25 has sought to rely on Section 118 of the Negotiable Instruments Act and contended that the defendant has failed to discharge the onus by not placing rebuttable evidence after having admitting his signature on EX.P12 . Now the question before this Court is whether the plaintiff has made out sufficient grounds to believe the execution of Ex.P12. At this stage it is appropriate to refer to Section 4 of the Negotiable Instruments Act defines, "A promissory note is an instrument in writing (note being a bank-note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money to or to the order of a certain person, or to the bearer of the instruments."
19. Thus the essential elements of Promissory Note are:
1. It must be in writing: A mere verbal promise to pay is not a promissory note. The method of writing (either in ink or pencil or printing, etc.) is unimportant, but it must be in any form that cannot be altered easily.
2. It must certainly an express promise or clear understanding to pay: There must be an express undertaking to pay. A mere acknowledgment is not enough.
OS No.730/2020 26
20. Section 118 of the Negotiable Instruments Act reads as under: Presumptions as to negotiable instruments.--Until the contrary is proved, the following presumptions shall be made:--
(a) of consideration:--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated or transferred, was accepted, indorsed, negotiated or transferred for consideration;
(b) as to date:--that every negotiable instrument bearing a date was made or drawn on such date;
(c) as to time of acceptance:--that every accepted bill of exchange was accepted within a reasonable time after its date and before its maturity;
(d) as to time of transfer:--that every transfer of a negotiable instrument was made before its naturity;
(e) as to order of indorsements:--that the indorsements appearing upon a negotiable instrument were made in the order in which they appear then on;
(f) as to stamp:-- that a lost promissory note, bill of exchange or cheque was duly stamped;
OS No.730/2020 27
(g) that holder is a holder in due course:--that the holder of a negotiable instrument is a holder in due course: provided that, where the instrument has been obtained from its lawful owner, or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.
21. After a careful scrutiny of EX.P12 and the relevant evidence on the said document it is evident that the plaintiff has secured admission regarding the signatures of DW1 at EX.P12 has meted out one of the requirement of Section 118 of the NI Act but admittedly EX.P12 is dated 2.9.2018 while it is the case of the plaintiff in para 7 of the plaint that EX.P12 was executed as security towards EX.P6. If EX.P12 was executed as security document for the discharge of the mortgage money then it ought to have been executed on the date of execution of EX.P6 itself i.e. 2.9.2016 and the same should have been recorded in the mortgage deed at EX.P6 . There is absolutely no pleading of OS No.730/2020 28 explaination for the same by the plaintiff. It is also pertinent to note that the EX.P12 notes that the rate of interest charged shall be 1.5% p.m; if EX.P12 is to be believed that the rate of interest would start from 2.9.2018 and not from 2.9.2016. But it is not the case of the plaintiff that he is entitled for interest from 2.9.2018 as per the recital of EX.P12 promissory note. There is a huge discrepancy in the pleading and evidence on this aspect and the necessay link establishing the execution of the promissory note towards security of second mortgage deed is not established. Section 118 (b) Of the Negotable Insruments Act states that unless contrary is proved there shall be presumption that every negotiable instrument bearing a date was made or drawn on such date. Thus there is a variance and contradiction between pleading and evidence. The plaintiff having approached the court is required to prove his case under Section 101 of the Indian Evidence Act and when the EX.P12 is not proved in terms of the plaint averments and the necessary foundation facts for raising presumption under Section 118 of the NI Act are absent no presumption can be raised. It is pertinent to note that unless all the requirements of Section 118 of the Negotiable Instruments are OS No.730/2020 29 met with no presumption under Section 118 of the Negotiable Instruments Act can be raised. It is profitable to refer to the ratio laid down by the Hon'ble High Court of Karnataka which is reported in 1967 (1) Mysore Law Journal 71 in between Rudrawwa Vs. Balawwa and another, wherein it has held as under:
"The scope of a suit is determined by the pleadings. Any amount of evidence cannot fill up lacuna in the pleadings. If the case is not pleaded, the same cannot be permitted.
22. And the the ratio laid down by Hon'ble High Court of Karnataka which is reported in 2004 (1) KCCR 662 in between K.Gopala Reddy (deceased) by LRs Vs. Suryanarayana Rao and others, wherein it has held as under:
B. PLEADINGS AND PROOF: Whenever a party approaches the Court for a relief, OS No.730/2020 30 based on the pleadings and issues, he has to prove his case. A suit has to be decided based on merits and demerits of the party who approaches the Court. Weakness of the Defendant cannot be considered as a trump card for the Plaintiff.
23. Thus this court is of the opinion that there is material discrepancy between the pleading and proof and therefore this Court is not inclined to believe the case of the plaintiff regarding execution of EX.P12 by the defendant as security towards the discharge of mortgage debt under Ex.P6. Besides it is pertinent to note that DW1 has stated that he has not written EX.P12 in his hand writing and at the same time PW1 has deposed that he does not know who has written the contents of EX.P12 and has further denied that the contents of the same were filled by him. Sec. 20 of the Negotiable Instruments Act permits payee to fill amount as well as date in blank signed cheques and thus complete inchoate instrument delivered to him. But it is not the case of the plaintiff that he has filled the instrument at EX.P12 and it is definite case OS No.730/2020 31 that the defendant has executed the promissory note. When it is the case of the plaintiff that EX.P12 has been executed by DW1 , then it was bounden duty to explain the circumstances in this behalf. In this regard also there is a material discrepancy between pleading and evidence and thus in view of the above discrepancy no finding can be recorded in favour of the plaintiff regarding execution of the promissory note and therefore issue no.2 and 3 are answered in negative.
24. Issue Nos.4 & 5 : It is the case of the plaintiff on the failure of the defendant to repay the amount under the Mortgage Deed at Ex.P.6 and Ex.P12, he had issued two cheques for a sum of Rs.10,00,000/- and another cheque for a sum of Rs.3,60,000/- on 12.11.2019 and the said cheques were returned with endorsement as "Account Closed on 16.01.2020" is proved by producing documents on Ex.P.13 to Ex.P.20. The plaintiff has produced the certified copies of cheque bearing No.308053 along with the returned memo issued by the defendant's banker and in furtherance of the same legal notice was issued to the defendant calling upon him to pay Rs.13,60,000/- within a period of Sixteen OS No.730/2020 32 days from the date of receipt of the Legal Notice to which defendant has issued reply notice at Ex.P.21 denying the issuance of cheques and contending that at the time of first Mortgage Deed dated 28.08.2012, the defendant had handedover blank cheques and blank Demand Promissory Notes and the same has been misused by the plaintiff. The plaintiff has produced Ex.P.13 to 28 in support of his plea regarding issuance of cheque and dishonor of the same. Ex.P.13 and Ex.P.15 are the/- cheques bearing Nos.308053 for a sum of Rs.10,00,000/- and 893070 for a sum of Rs.3,60,000/- and Ex.P.14 and 15 are the returned memos stating as per the memo attached on leaf. Ex.P.17 is a legal notice issued by the plaintiff to the defendant calling upon him to pay Rs.13,60,000/- and Ex.P.21 is a reply notice issued by the defendants stating that the plaintiff has misused the cheques and on Demand Promissory Note and denied issuance of the above cheques in the first week of November 2019, agreeing to pay the principal amount and part of the interest amount from 2016 and accordingly asked him to withdraw the notice at Ex.P.20. Ex.P.27 and Ex.P.28 are same as Ex.P.7 and Ex.P.11. In furtherance of the above oral and documentary evidence PW.1 plaintiff has OS No.730/2020 33 contended that necessary presumption under Sec.139 of the NI Act has to be drawn and hold the defendant liable to pay the cheque amount at Ex.P.13 and Ex.P.15 Rs.16,00,000/-. During the course of cross-examination of PW.1 it is suggested to PW.1 by defendant that he has instituted criminal proceedings against the defendant for dishonor of cheques and the same is pending adjudication. Upon perusal of evidence with respect to the above issues it is found that the plaintiff has not raised any whisper regarding the existence of pro-note and the above referred two cheques in his custody at the time of issuing notice at Ex.P.7 on 12.12.2019 and he has restricted his notice to the claim under registered Mortgage deeds alone and thereafter it appears that the plaintiff as an afterthought has sought to lay his claim on the impugned cheques at Ex.P.13 and Ex.P.15 and this is further evident from the legal notice dated 18.1.2020 issued by the plaintiff to the defendant at EX.P17. The legal notice issued by the plaintiff at Ex.P17 brings out a new story regrading execution of promissory note and cheques by the plaintiff for the first time as against the legal notice at EX.P7,where the claim of the plaintiff was restricted to the mortgage sum. The plaintiff has no OS No.730/2020 34 whispered regarding the these instruments in his notice at EX.P7.
It appears that EX.P17 was issued after receiving the reply notice of the defendant at EX.P11 dated 20.12.2019 . If Ex.P13 and EX.P15 are dated 12.11.2019 then the plaintiff ought to have whispered regarding these cheques in his legal notice at EX.P7. There is no necessary pleading with reference to the said discrepancy in the plaint. Hence in the absence of necessary foundational facts this Court cannot draw presumption U/s.139 of the NI Act. No doubt Section 139 of the Negotiable Instruments Act raises a presumption that unless the contrary is proved, that the holder of a cheque received the cheque of the nature referred to in section 138 for the discharge, in whole or in part, of any debt or other liability. But the plaintiff has to establish the foundational facts for raising presumption.Therefore plaintiff has failed to prove that defendant had issued cheques at Ex.P.13 and 15 towards the legally recoverable debt under Ex.P.6 and towards part of the interest from 2016. Accordingly, issue No.5 and 6 are answered in Negative.
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26. ISSUE Nos.6 & 7 :- The above suit is filed seeking recovery of money secured through Mortgage Deeds at Ex.P.1 and Ex.P.6 for a sum of Rs.10,00,000/-. As per Sec.58 of the Transfer of Property Act, Mortgage is a transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan. An existing or future debt or the performance of an engagement which may give rise to pecuniary liability. While Section 58(b) of the Transfer of Property Act defines Simple mortgage as under: Where, without delivering possession of the mortgaged property, the mortgagor binds himself personally to pay the mortgage-money, and agrees, expressly or impliedly, that, in the event of his failing to pay according to his contract, the mortgagee shall have a right to cause the mortgaged property to be sold and the proceeds of sale to be applied, so far as may be necessary, in payment of the mortgage-money, the transaction is called a simple mortgage and the mortgagee a simple mortgagee.
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27. In the above case as per the recitals of Ex.P.1 and P.6 the Mortagager had agreed to secure the money advanced by the plaintiff reserving liberty to the Mortgagee to recover the money advanced to seek attachment of the schedule property and seek sale of schedule property for the recovery of the amount advanced to the defendant by way of simple mortgage. Thus the transaction with respect to execution of Registered Mortagage Deed is proved by the plaintiff and accordingly he is entitled for the Mortagage debt of Rs.10,00,000/- . However the plaintiff has failed to prove the interest claimed in the suit @ 18% from 02.09.2016. There is no cogent and reliable evidence with respect to the rate of interest alleged to be agreed between the parties. In the absence of proof of any agreement through oral or documentary evidence this Court of the view that the plaintiff is entitled for a sum of Rs.10,00,000/- and his prayer to award a pre-suit interest for a sum of Rs.6,31,250/- is rejected. However, U/s. 34 of the CPC the plaintiff is entitled for interest from the date of suit till the date of realization which shall be at the rate of 6% p.a. in this regard it is relevant to observe that the defendant had borrowed loan from the plaintiff to meet his family necessity and OS No.730/2020 37 for business purpose and further PW.1 during the course of his cross-examination has specifically admitted that the defendant had borrowed an additional sum of Rs.5,00,000/- in order to meet his medical expenses and educational expenses of his children. The defendant has admitted the contents of Ex.P1 wherein there is a recital that the defendant had borrowed the loan for business purpose. Therefore in the above facts and circumstances the transaction between the plaintiff and defendant shall be considered as a commercial transaction. Here it is pertinent to note Section 34 of C.P.C., which reads thus:
"34. INTEREST: (1) Where and insofar as a decree is for the payment of money, the Court may, in the decree, order interest at such rate as the Court deems reasonable to be paid on the principal sum adjudged, from the date of the suit to the date of the decree, in addition to any interest adjudged on such principal sum for any period prior to the institution of the suit, with further interest at such rate not exceeding six per cent per annum as the Court deems reasonable on such principal sum, from the date of the decree OS No.730/2020 38 to the date of payment, or to such earlier date as the Court thinks fit:
Explanation I. - *** Explanation II. - For the purposes of this Section, a transaction is a commercial transaction, if it is connected with the industry, trade or business of the party incurring the liability."
28. In the case of M/S. MEENAKSHI PHARMA DISTRIBUTORS, BENGALURU Vs. STATE OF KARNATAKA AND OTHERS reported in 1999 (2) KLJ 164, it has been held that transaction is to be held commercial only if it is connected with industry, trade or business of the judgment debtor under money decree and not of the decree holder. Since the loan was availed by the defendants for their business purpose and the transaction with the plaintiff bank is a commercial transaction, the rate of interest during the pendency of the suit and future interest from the date of decree till realization would be at the rate @ 8% in terms of OS No.730/2020 39 the proviso of Section 34 CPC, i.e. at the rate at which moneys are lent or advanced by nationalised banks in relation to commercial transactions. Thus the defendant is liable to pay interest @ 8% on the principal amount of Rs.10,00,000/-. Thus the defendant is held liable to pay his due towards the Mortgage Deed debt at the rate of 8% per annum and in case the defendant fails to pay the due amount the plaintiff is entitled to apply for final decree for a sale of Mortgage schedule property. and Issue No.6 & 7 are answered accordingly.
29. Issue No.8 :- In view of the findings on Issues Nos.1 to 7, this Court proceed to pass the following:
ORDER The suit of the plaintiff is partly decreed with costs.
The defendant is liable towards the Mortgage debt of Rs.10,00,000/-and he is further liable to pay the same to the plaintiff with interest at the rate of 8% p.a. from the OS No.730/2020 40 date of suit till realization. In case the defendant has failed to pay the due amount the plaintiff is entitled to apply for final decree for a sale of Mortgaged schedule property. Draw Preliminary decree.
(Dictated to the Stenographer Grade-III, transcribed and typed by her, corrected, signed and then pronounced by me in the open court, on this the 29th day of February, 2024).
(SUMANGALA CHAKALABBI) XLI Addl. City Civil and Sessions Judge, Bengaluru.
ANNEXURE I. List of witnesses examined on behalf of :
a) Plaintiff's side: P.W.1 - Sri Dinesh Kumar.M.K.
b) Defendant's side: D.W.1 - Sri R.Jagadish II. List of documents exhibited on behalf of :
a) Plaintiff's side:
Ex.P.1 : Original registered mortgage deed by deposit of title deed dated 28.08.2012 Ex.P.2 : Original Registered partition deed dated 05.09.2003 Ex.P.3 : Certified copy of an EC from OS No.730/2020 41 01.04.1997 to 31.03.2004 Ex.P.4 : Certified copy of EC from 01.04.2004 to 21.08.2012 Ex.P.5 : RTC extract as on 22.08.2012 Ex.P. 6 : Original registered mortgage deed by deposit of title deed dated 02.09.2016 Ex.P. 7 : Legal notice dated 12.12.2019 Ex.P. 8 : Copy of the Postal receipt Ex.P. 9 & : Returned RPAD envelop Ex.P. 9(a) containing notice and notice therein Ex.P. 10 : Courier receipt Ex.P. 11 : Reply notice dated 20.12.2019 Ex.P. 12 : Certified copy of On demand promissory note dated 02.09.2018 along with consideration receipt Ex.P. 13 : Certified copy of cheque bearing No. 308053 Ex.P. 14 : Certified copy of memo issued by Karnataka Bank dated 17.01.2020 Ex.P. 15 : Certified copy of cheque bearing No. 893070 Ex.P. 16 : Certified copy of bank memo issued by Karnataka Bank dated 17.01.2020 Ex.P. 17 : Certified copy of Legal notice issued by plaintiff Ex.P. 18 : Courier receipt dated 18.01.2020 Ex.P. 19 : Postal receipt Ex.P. 20 : Postal acknowledgement Ex.P. 21 : Reply notice issued by defendant OS No.730/2020 42 Ex.P. 22 : Certified copy of Bank challen dated 08.01.2020 Ex.P. 23 : Certified copy of Bank challen dated 17.01.2020 Ex.P. 24 : Certified copy of Bank challen dated 17.01.2020 Ex.P. 25 : Certified copy of return memo report dated 10.01.2020 Ex.P. 26 : Certified copy of return memo report dated 10.01.2020 Ex.P. 27 : Certified copy of of legal notice issued by plaintiff Ex.P. 28 Certified copy of Reply notice issued by defendant Ex.P. 29 & Signatures Ex.P. 30 III. List of documents exhibited on behalf of :
b) Defendant's side : NIL (SUMANGALA CHAKALABBI) XLI Addl. City Civil and Sessions Judge, Bengaluru.
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