Delhi District Court
Sh. Kanwar Pal Singh vs Sh. Satish Chawala on 4 October, 2007
1
IN THE COURT OF SH. GIRISH KATHPALIA,
ADDITIONAL DISTRICT JUDGE, DELHI
SUIT NO.259/06
SH. KANWAR PAL SINGH,
S/O LATE SH. THAKUR KARAN SINGH
R/O 1/9074, GALI NO.2,
WEST ROHTAS NAGAR,
SHAHADARA,
DELHI. ....PLAINTIFF
versus
SH. SATISH CHAWALA,
S/O SH. CHELA RAM CHAWLA,
R/O B-39, MAHENDRU ENCLAVE,
NEAR MODEL TOWN,
DELHI.
ALSO AT:
145, S.M. MARG,
NEAR GANDA NALA,
BAZAR KASHMERE GATE,
DELHI. ....DEFENDANT
DATE OF INSTITUTION: 26/09/2006
ARGUMENTS CONCLUDED ON: 28/09/2007
DATE OF DECISION: 04/10/2007
Counsel for Plaintiff: Sh. Ashu Jain, Advocate
Counsel for Defendants: Sh. J.M. Bari, Advocate
JUDGMENT
1. This suit for recovery of Rs.3,37,500/-was originally filed under the provisions of Order XXXVII CPC but on the very first occasion, ld counsel for plaintiff fairly conceded and the CS/259/06 Page 1 of 18 pages 2 suit was converted into ordinary suit.
2. As pleaded in the plaint, defendant a manufacturer and trader of fan belts under the name and style of M/s Super Rubber Industries had friendly relations with the plaintiff for past 25 years and was in habit of taking loans from plaintiff time to time. Defendant took a loan of Rs.2,00,000/- from the plaintiff on 29/04/99 and loan of Rs.50,000/- from wife of plaintiff in June 1999. Towards discharge of his liability, the defendant issued cheque dated 12/12/01 for Rs.2,00,000/- in favour of plaintiff and cheques dated 30/06/02 and 30/07/02 for Rs.25,000/- and Rs.24,000/- in favour of plaintiff's wife.
3. In October 2002, defendant again approached the plaintiff for a loan of Rs.2,60,000/- as he had suffered business loss. Relying upon the defendant's assurance to clear all previous loan by the year 2003, plaintiff again advanced a loan of Rs.2,60,000/- in October 2002. Defendant executed a bond/promissory note, wherein he promised to pay Rs.1,00,000/- upto November 2002 and Rs.1,50,000/- in installments of Rs.25,000/- each starting from the month of May 2003 to be squared up in October 2003. Balance CS/259/06 Page 2 of 18 pages 3 Rs.10,000/- was paid by the defendant in cash.
4. When plaintiff approached the defendant in the month of November 2002 for payment of Rs.1,00,000/-, the defendant requested for time and assured to pay the same alongwith first installment of Rs.25,000/- in May 2003.
5. In the meanwhile, the cheques of Rs.25,000/- and Rs.24,000/- issued by the defendant to plaintiff's wife got dishonoured.
6. In the month of May 2003, plaintiff again approached the defendant with demand to clear the earlier loan of Rs.2,00,000/- which had been advanced in April 1999 and loan of Rs.50,000/- advanced by plaintiff's wife and the loan installments of Rs.1,00,000/- which was payable in November 2002 and Rs.25,000/- which became payable in May 2003. But the defendant refused to pay back a single penny.
7. For recovery of loan of Rs.2,00,000/- advanced in April 1999 and Rs.50,000/- advanced by plaintiff's wife, separate suits were filed and were decreed.
8. As per plaintiff, he is also entitled to interest at a CS/259/06 Page 3 of 18 pages 4 rate of 24% per annum as per market usage and customs though he is claiming interest at a rate of 12% only which comes to Rs.87,500/- from October 2003 till September 2006.
9. Since despite legal notice dated 25/06/06 defendant did not pay the said amount, plaintiff has brought the present suit.
10. Defendant in the written statement took a preliminary objection that the suit, filed on 26/09/06 is hopelessly time barred in respect of installments payable till August 2003. Defendant also pleaded that the promissory note of October 2002 was without consideration and hence not enforceable. The said promissory note as per defendant is in the nature of simple money bond as defined under section 2(5)(b) of the Indian Stamp Act and the appropriate stamp duty was not paid, as such the same cannot be looked into.
11. On merits, the defendant denied having taken loan from the plaintiff. Defendant also denied having issued the cheques of Rs.2,00,000/-, Rs.25,000/- and Rs.24,000/- in the name of plaintiff and his wife in the year 2002. Defendant also denied having received any loan of Rs.2,60,000/- from plaintiff CS/259/06 Page 4 of 18 pages 5 in October 2002. However, the defendant did not deny having written in his hand the above said bond.
12. Defendant pleaded that suit brought by plaintiff is false and deserves to be dismissed.
13. Plaintiff filed a detailed replication, denying the pleadings of the defendant and reaffirmed the plaint contents. Plaintiff pleaded that the suit is within limitation since the period prescribed would begin to run from October 2003 as stipulated by the promissory note. Plaintiff denied that the document dated October 2002 is a simple money bond or without consideration.
14. On the basis of pleadings, following issues were framed:-
1. Whether the suit is time barred? OPD
2. Whether plaintiff advanced a loan of Rs.2,60,000/-
to the defendant? OPP
3. Whether promissory note relied upon by the plaintiff is not enforceable? OPD
4. Whether the promissory note relied upon by the plaintiff is not duly stamped? If so, its effect? OPD
5. Whether plaintiff is entitled to recovery of the suit amount? OPP
6. Whether plaintiff is entitled to any interest on the CS/259/06 Page 5 of 18 pages 6 suit amount? If so, at what rate and for what period? OPP
15. In support of his case, plaintiff examined two witnesses including himself while defendant appeared as his solitary witness.
16. While deposing as PW1, plaintiff testified on oath the above mentioned contents of his plaint and proved on record the bond/promissory note dated October 2002 as Ex.PW1/A and legal notice as Ex.PW1/B. Looking into the objections raised by the defendant, ld. counsel for plaintiff took back the original Ex.PW1/A for the purposes of getting the same stamped. Thereafter the duly stamped promissory note was refiled on 28/04/07. In his cross examination, PW1 stated that the loan of Rs.2,60,000/- had been taken by defendant in August 2002 and by end of that month defendant returned Rs.10,000/- in cash. None else was present at the time of giving loan as he had been dealing with the defendant for past 25 years and used to lend money quite often. Since earlier the defendant did not have any bad intention, as per PW1 he advanced more loan to the defendant and without any written record. Plaintiff also proved on record defendant's reply CS/259/06 Page 6 of 18 pages 7 to the legal notice as Ex.PW1/D1. PW1 explained that in view of smooth relations with defendant, he had been demanding back the loan amount only telephonically and did not write any letter prior to the legal notice. PW1 stated that one of the signatory witness to Ex.PW1/A was Kuldeep Vashisht while the other witness was brought by the defendant.
17. The said Kuldeep Vashisht appeared as PW2 and deposed that in the month of October 2002 he witnessed the promissory note Ex.PW1/A at request of plaintiff since he knew both the parties. PW2 identified his signatures on the promissory note Ex.PW1/A. In his cross examination, PW1 stated that he did not remember the exact date of execution of Ex.PW1/A. He stated that the document was signed at plaintiff's shop in Kashmere Gate in presence of both the parties and one or two persons from defendant's side whose names he did not know. PW2 stated that plaintiff is his friend's relative and admitted that he has filed a case for offence under section 138 NI Act against the defendant but denied that he is inimical to the defendant.
18. Defendant stepped into the box as DW1 and CS/259/06 Page 7 of 18 pages 8 deposed on oath the above mentioned contents of his written statement. Defendant stated that the bond/promissory note dated October 2002 is without consideration as plaintiff never gave him any loan. Defendant also denied having ever taken any loan from plaintiff or his wife. In his cross examination, DW1 admitted that he knew the plaintiff since the year 1977 as they had been studying in the same college and had common friends. He admitted that plaintiff's suit for recovery of Rs.2,00,000/- has been decreed against him in Karkardooma Courts. He also admitted that suit of plaintiff's wife for recovery of Rs.50,000/- is pending in the court of Civil Judge and initially the said suit also had been decreed exparte. DW1 admitted that in the earlier suit of plaintiff he took a defence that son of plaintiff has stolen the cheque book while in suit of plaintiff's wife he took a defence that he gave advance cheques to son of plaintiff for supply of cosmetics by plaintiff's wife. DW1 admitted having mentioned in his application Ex.DW1/P1 that the cheques pertaining to the said suit had been given by him on his own to plaintiff's son. DW1 categorically admitted that the document Ex.PW1/A is in his CS/259/06 Page 8 of 18 pages 9 handwriting and bears his signatures at portion X.
19. No other evidence was brought by either side. I have heard ld. counsel for both the parties who took me through the record including their written arguments. My issuewise findings are as under:-
ISSUE NO.1:-
20. As per plaintiff, since the loan was to be paid back by the month of October 2003, as per explicit terms of the document Ex.PW1/A, the present suit filed on 26/09/06 is well within limitation period. As per defendant, since the loan was given in October 2002, the suit is time barred. As mentioned above, defendant categorically admitted in his cross examination having written the document Ex.PW1/A.
21. Ld. counsel for defendant argued that the present case is covered by Article 36 of the Limitation Act since Ex.PW1/A is a promissory note or bond payable by installments. As per Ex.PW1/A the loan had to be paid back by way of first installment of Rs.1,00,000/- on 15/11/02 and the balance amount by way of monthly installments of Rs.25,000/- each from May 2003 to October 2003. In terms CS/259/06 Page 9 of 18 pages 10 with Article 36 of the Limitation Act, the limitation period of three years would begin to run on expiration of term of each installment. Thereby, plaintiff can claim for installments of Rs.25,000/- each for the months of September 2003 and October 2003 only in this suit brought on 27/09/06. Ld. counsel for defendant placed reliance on the judgment of Hon'ble Madras High Court in the case of V. NARAYANA SWAMI vs SRI MOHAN PRASAD SINGH DEO, AIR 1959 MADRAS 82.
22. Per contra, ld. counsel for plaintiff argued that Ex.PW1/A is a simple bond and the relevant Article of the Limitation Act is Article 28, as per which the limitation of three years would begin to run from the date specified for payment in the bond. Taking three years from the date of October 2003 specified for payment, the suit brought on 26/09/06 is within limitation period. Ld. counsel for plaintiff placed reliance on the judgments of BHAGWANT RAO DEO RAO PATIL vs MOHD. KHAN ASGAR KHAN, AIR 1977 MP 270; JILLELLAMUDI DHANLAKSHMI vs UNION BANK OF INDIA, 1992 CCC 446 (AP); and ARJUN SAHAI vs PITAMBAR DASS, AIR 1963 CS/259/06 Page 10 of 18 pages 11 ALLAHABAD 278.
23. In order to appreciate the rival contentions, it would be appropriate to record verbatim the contents of Ex.PW1/A:
"I Satish Chawla S/o C.R. Chawla hereby agree to pay Rupees Two Lakhs Sixty Thousand to Sh. Kanwar Pal S/o Sh. Khem Singh Tomar which I will pay as under:
Upto 15 Nov. 2002 100000/- One Lakh And balance amount will be paid Twenty Five Thousand Only every month which will start from May 2003 and account will be clear in the month of Oct 2003.
Witnesses Sd/-"
(emphasis supplied)
The bold italicised words of Ex.PW1/A are very crucial in deciding the issue under consideration.
24. The judgment of V. NARAYANA SWAMI (supra) relied upon by the defendant is distinguishable from the present case in the sense that in the case before Hon'ble Madras High Court, clause (b) of the bond clarified that time to sue for the installments would start to run when there was a default in the first instance and clause (f) confirmed right on the creditor to recover only the unpaid installments. In contrast, the italicised portion of bond Ex.PW1/A clearly CS/259/06 Page 11 of 18 pages 12 shows that unlike the Madras case, in the present case the accounts were to be cleared in October 2003. Unlike the Madras case, in the present case plaintiff could not have brought suit in the event of default of any one of the installments and was required to wait till October 2003 when the account was to be cleared.
25. Case of BHAGWANT RAO (supra) relied upon by plaintiff pertains to situation similar to the present case in the sense that the bond Ex.P1 before the Hon'ble Madhya Pradesh High Court stipulated that the right to recover the whole amount of bond would accrue to the plaintiff only upon default of payment of all the installments and plaintiff could not have brought the suit before expiry of 10 months from the date of bond. Looking into the contents of bond Hon'ble Madhya Pradesh High Court held that plaintiff of that case had no right to bring the suit for the whole amount or even a part thereof before expiry of 10 months. In the present case also, as reflected from the bond Ex.PW1/A, the amount of Rs.2,50,000/- had to be paid by way of installments of Rs.1,00,000/- by 15/11/02 and the balance by monthly CS/259/06 Page 12 of 18 pages 13 installments starting from May 2003 and the account had to be cleared in October 2003. The bond stipulated that even if there is a default of any installment, the plaintiff had to wait till October 2003 for clearing of the account. As such, plaintiff could not have brought suit before October 2003.
26. The relevant Article of Limitation Act applicable in the present case has to be Article 28 only and limitation period of three years for filing this suit has to be taken to run from 01st October 2003 only. Thereby, the present suit brought on 26/09/06 was well within time and accordingly issue no.1 is decided against the defendant.
ISSUE NO.2:-
27. The only argument advanced on the issue under consideration by ld. counsel for defendant was that in para 6 of plaint it has been pleaded that the loan was given in October 2002 while in cross examination, PW1 states that the loan was given in August 2002. That, as per ld. counsel for defendant is a material contradiction as regards issue under consideration.
28. I fail to agree with the argument that the CS/259/06 Page 13 of 18 pages 14 contradiction pointed out above is so material as to strike at the very roots of the case. For, as mentioned above, in his cross examination the defendant/DW1 categorically admitted having not just signed but even authored the bond/promissory note Ex.PW1/A. Defendant failed to explain as to what was the occasion for him to write Ex.PW1/A if he had not taken loan of Rs.2,60,000/- from plaintiff. On the other hand, plaintiff has examined besides himself even a signatory witness to Ex.PW1/A. In his cross examination, the plaintiff/PW1 explained that he had been dealing with the defendant for past 25 years and the latter used to often take loan and even pay back the same, which is the reason PW1 did not remember the exact date or month of the present loan transaction. Both the witnesses examined in support of plaintiff's case were cross examined at length but their testimony remains unshaken.
29. In view of above discussion, issue no.2 is decided in favour of plaintiff and it is accordingly held proved that plaintiff had advanced a loan of Rs.2,60,000/- to the defendant.
CS/259/06 Page 14 of 18 pages
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ISSUES NO.3&4:-
30. Onus to prove both these issues was on defendant but neither any evidence was led nor even arguments were addressed. The issues under consideration were framed in view of objections in the written statement that since Ex.PW1/A is without consideration and not duly stamped, the same is void and not enforceable.
31. So far as the issue of consideration is concerned, as reflected from findings on issue no.2, it has been clearly established that plaintiff had advanced loan of Rs.2,60,000/- to the defendant for repayment whereof the defendant executed bond/pronote Ex.PW1/A. As such, it cannot be said that Ex.PW1/A is without consideration or not enforceable.
32. So far as the issue of stamp is concerned, as reflected from record the document Ex.PW1/A was taken back by ld. counsel for plaintiff who got the same duly stamped from Collector of Stamps after paying the due duty as well as penalty. In view of certificate issued by the Collector of Stamps on the reverse side of Ex.PW1/A, it cannot be said now that the document is not duly stamped.
CS/259/06 Page 15 of 18 pages 16
33. Accordingly, issues no.3&4 are decided against the defendant.
ISSUE NO.5:-
34. As per plaintiff's own case, out of the loan amount of Rs.2,60,000/- he has received back a sum of Rs.10,000/-, leaving the balance outstanding to be Rs.2,50,000/-. Plaintiff claims himself to be entitled to presuit interest at a rate of 24% per annum as per market usage and custom but restricts his claim to 12% per annum which comes to the tune of Rs.87,500/- till filing of the suit. Defendant denied the rate of interest in written statement.
35. Plaintiff brought absolutely no evidence to show the market usage or custom which would justify interest at a rate of 24% or even 12% per annum.
36. Admittedly, Ex.PW1/A is totally silent as regards interest and there was no agreement between the parties for interest. Under similar circumstances in the case of UNICORN INTERNATIONAL vs DESERT TRADERS CANADA INC., 2006 VII AD (DELHI) 791, Hon'ble Delhi High Court held the plaintiff entitled to interest as per the Interest Act, 1978 from CS/259/06 Page 16 of 18 pages 17 the date when interest was claimed and at the rate offered by the scheduled banks on fixed deposits and in the absence of evidence as regards interest rate offered by the banks, Hon'ble High Court took the rate of interest to be 8% per annum. Considering the overall circumstances of this case, in my opinion plaintiff of this case also is entitled to a simple presuit interest at a rate of 8% per annum on the loan amount of Rs.2,50,000/- with effect from 25th June 2006 when plaintiff issued legal notice till 26th September 2006 when the suit was filed and the same comes to Rs.5,000/-.
37. In view of above discussion, issue no.5 is decided in favour of plaintiff and he is held entitled to recovery of Rs.2,55,000/- which comprises of Rs.2,50,000/- towards principal outstanding and balance towards presuit interest. ISSUE NO.6:-
38. In view of law discussed above, plaintiff is also entitled to pendentelite and future interest at a rate of 8% per annum on Rs.2,55,000/- and issue no.6 is decided to that extent in favour of plaintiff.
CS/259/06 Page 17 of 18 pages
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RELIEF:-
39. In view of above findings, suit is decreed against the defendant for a sum of Rs.2,55,000/- (Rupees Two Lakh Fifty Five Thousand Only) with cost and interest at a rate of 8% per annum from the date of filing the suit till the date of actual payment.
40. Decree sheet be accordingly drawn up and file be consigned to record room.
ANNOUNCED IN THE OPEN COURT ON 04th October 2007 (GIRISH KATHPALIA) ADDL. DISTRICT & SESSIONS JUDGE DELHI CS/259/06 Page 18 of 18 pages