Bangalore District Court
Sri. Venkatesh H. S vs M/S Nikhara Finance Corporation on 13 August, 2021
IN THE COURT OF THE LXXII ADDL. CITY CIVIL
& SESSIONS JUDGE AT MAYO HALL
BENGALURU, (CCH-73)
Present:
Sri .Abdul-Rahiman. A. Nandgadi,
B.Com, LL.B., (Spl.,)
LXXII Addl. City Civil & Sessions Judge, Bengaluru.
Dated this the 13th day of August, 2021.
O.S.No.26151/2018
Plaintiff:- Sri. Venkatesh H. S,
S/o N. S. Gopalachar,
Aged about 55 years,
R/at No.7, 1st Cross,
CIL Layout, Cholanayakanahalli,
R. T. Nagar Post,
Bengaluru-560 032.
[Sri. Janardhana G-Advocate]
V/s
Defendants:- 1. M/s Nikhara Finance Corporation,
27, 10th Main, Srinagar,
Banashankari 1st Stage,
Bengaluru,
Represented by its Managing Partner,
Mr. Kodandaram. P,
S/o. S. A Pillai,
Aged about 50 years,
2 OS No.26151/2018
2. Smt. B. Bharathi,
W/o Kodandaram. P,
Aged about 45 years,
No.27, 10th Main, Srinagar,
Banashankari 1st Stage,
Bengaluru- 560 050.
[By Sri. H. S. Sheshadri-Adv]
Date of Institution of the suit
25.09.2018
Nature of the (Suit or pro-note, suit
for declaration and possession, suit
Recovery of Money
for injunction, etc.)
Date of the commencement of
recording of the Evidence. 05.09.2019
Date on which the Judgment was
pronounced. 13.08.2021
Year/s Month/s Day/s
Total duration 02 10 19
LXXII ADDL.CITY CIVIL AND SESSIONS JUDGE,
Mayohall Unit: Bengaluru.
.
3 OS No.26151/2018
JUDGMENT
Plaintiff has filed the present suit against the Defendants for recovery of Rs.23,38,334/-, alongwith Court costs and future interest @ Rs.18% p.a., from the date of filing of the suit, till the date of its realization.
2. The brief facts of the Plaintiff's case are as under:
It is the case of the Plaintiff that, the Defendant No.1 is the partnership firm consisting of two partners viz., Sri. Kodandaram and his wife Smt. B. Bharati- Defendant No.2, amongst them Mr. Kodandarama, is its Managing Partner, who has been authorized to manage the affairs of the firm.
Further contends that, the Defendants have received a sum of Rs.20,00,000/- from the Plaintiff for investing the same in their various on-going housing projects, one amongst them, situate at Kallenahalli Village, Mandya District, on executing On-demand Promissory Note together with consideration receipt, in his favour on 18.11.2016, 4 OS No.26151/2018 agreeing to repay the said amount with interest @ Rs.11% pa., at the end of 24 months. The said interest amount comes to Rs.2,20,000/-. Thus, in all the Defendants have to pay Rs.22,20,000/-, on the maturity date i.e, on 18.11.2017. The Defendants have failed to repay the Principle amount of Rs.20,00,000/- alongwith interest, to him, inspite of his several demands and requests. The Defendants went on postponing to repay the same, for one or the other reasons. He issued a legal notice to the Defendants on 03.07.2018, followed by a rejoinder dtd.30.08.2018, calling upon them to repay total amount of Rs.22,20,000/-, within 10 days of receipt of the said notice. Though the Defendants have received the same, they have neither replied nor complied the same. Hence, the Plaintiff is constrained to file the present suit for recovery of Rs.23,38,334/- alongwith costs and interest, from the Defendants.
3. The suit summons were issued to the Defendants. The Defendants have appeared through their Counsel on 15.12.2018. The Defendants have filed their Written Statement on 15.12.2018.
5 OS No.26151/20184. The Defendants in their Written Statement have contended that, the Suit Plaint of the Plaintiff is not maintainable both in law and facts. They admit that, Defendant No.1 is a partnership firm, but denies that, the said firm consist of two partners viz., Kodandaram and Smt. B. Bharati- Defendant No.2; and that Sri. Kodandaram is a Managing Partner of the said firm. Further denies that, they have received a sum of Rs.20,00,000/- from the Plaintiff for investing same in their various ongoing housing projects, the one situate at Kallenahalli Village, Mandya District. They also denies that, they have executed an On-demand Promissory Notice with consideration receipt on 18.11.2016, agreeing to repay the said amount with interest @ Rs.11% pa., the total interest which comes to Rs.2,20,000/-, on the day of maturity ie., on 18.11.2017. Further denies that, they have dodged the repayments, to be made to the Plaintiff. Further admits receipt of the legal notice on 03.07.2018 But specifically denies that, they are liable to pay Rs.23,38,334/-, as claimed by the Plaintiff with interest and costs.
6 OS No.26151/2018Further contends that, the suit of the Plaintiff is bad for non-joinder of necessary parties. Hence prayed to dismiss the suit.
5. On the basis of the above said pleadings, following issues have been framed on 17.06.2019 as under:
ISSUES
1. Whether the Plaintiff proves that, he has invested an amount of Rs.20,00,000/- in the various projects held by the Defendants and inturn the Defendants have agreed to return the said amount along with 11% interest at the end of 24-
months, as contended by him in para No.3 of the suit plaint?
2. Whether the Plaintiff is entitled for the relief of recovery of money alongwith cost and interest @ 18% p.a., as prayed for by him in the suit plaint?
3. What order or decree?
6. The Plaintiff inorder to prove his case, got himself examined as PW1 on 05.09.2019 and got marked 11-documents as Ex.P.1 to Ex.P.11. PW1 is 7 OS No.26151/2018 cross examined on behalf of the Defendants on 20.01.2020.
Percontra, the Defendants have led the evidence of Kodandaram as DW.1 and got marked 01-document, as Ex.D1. DW.1 was cross examined on the behalf of the Plaintiff on 07.03.2021. Ex.P12 was got marked on confrontation to DW.1. So also, Ex.P1(A) and Ex.P1(B) were got marked on confrontation to DW.1.
7. Heard the arguments of the Learned Counsels for the Plaintiff and the Defendants, respectively.
The Learned Counsel for the Plaintiff has placed his reliance on the decision of the Hon'ble Apex Court, reported in (2012) 8 SCC 516.
8. My findings on the above said issues are as under:
Issue No.1: Partly in the Affirmative; Issue No.2: Partly in the Affirmative;
Issue No.3: As per final order for
the following:
8 OS No.26151/2018
REASONS
9. ISSUE NO.1:-
It is the case of the Plaintiff that, he has invested an amount of Rs.20,00,000/- with the Defendant No.1 firm. Defendant No.1 through its Managing Partner has executed, On-demand Promissory Note and consideration receipt in his favour, agreeing to repay the said amount with interest @ Rs.11% pa., on its maturity, having a period of 24 months. On completion of maturity, the Defendants have failed to repay the said amount, inspite of receipt of legal notice issued by him through his counsel.
10. Percontra, the first line of defence of the Defendants is that, Mr. Kodandaram. P/ DW.1 is not the Managing Partner, but he is the authorized Signatory. He is not the proper party to the suit.
10.01. The Defendants have admitted in their Written Statement, more specifically, at Para No.2 that, Defendant No.1 is a partnership firm consisting of two partners. But denied that, Mr. Kodandaram is the Managing Partner, but contents 9 OS No.26151/2018 he has been authorized to manage the affairs of the firm.
10.02. The Learned Counsel for the Plaintiff would contend that, Plaintiff has produced On-
demand Promissory Note, in this case at Ex.P1, wherein DW.1 has affixed his signatures on it, in the column prescribed for affixture of signature by the Managing Partner /Authorized Signatory for Nikhara Finance Corporation (R).
Coming to the ocular evidence, on this point, more specifically, cross examination of DW.1, at Page No.8, Para No.3, which reads as under:-
"Now a On demand Promissory Note marked at Ex.P1 is shown to the witness and question to identify his signature on it. Witness identifies his signature on Ex.P1 in the columns of signatures of Authorized Signatory on the front page and on the rare page, on it. On confrontation and admission the said signatures of the witness in marked as Ex.P1(A) and Ex.P1(B)."
As per this evidence, DW.1 admits his signature on Ex.P1, as Ex.P1(A) and Ex.P1(B). The said signatures have been marked, on confrontation to DW.1.
10 OS No.26151/201810.03. Further cross examination of DW.1, at Page No.10, Para Nos.2, 3 and 5, which reads as under:-
"Que: You have signed Ex.P1 On demand Promissory Note as the Managing Partner/Authorized Signatory?
Ans: I am not the Managing Partner, but I am the Authorized Signatory of the Defendant No.1 firm.
Defendant No.1 has authorized me to transact as its Authorized Signatory. I have not produced any document in this case to show the said authorization.
It is false to suggest that, I am not the Authorized Signatory of the Defendant No.1 firm, but I am the Managing Parter of Defendant No.1 firm."
As per this evidence, DW.1 contends that, he is not the Managing Partner, but he is the Authorized Signatory of Defendant No.1 firm. The Defendant No.1 has authorized him to transact, as its authorized Signatory, but admits that, he has not produced any document in this case, to show such authorization. Further DW.1 contends that, the partners of Defendant No.1 firm have authorized him in the year 2005 and he has no any impediment to produce the said authorization in this case.
11 OS No.26151/201810.04. Further as per the cross examination of DW.1, at Page No.5, Para Nos.3 and 2; Page No.7, Para No.4; and Page No.8, Para No.1, which read as under:-
"Defendant No.1 firm is registered with the Registrar of firms. It is having two partners viz., the Defendant No.2 and one Rajanna, S/o Kempanna, R/o K.G. Pura, Shidalaghatta Taluk. The 2nd partner Rajanna does not reside at Bengaluru. It is true to suggest that the said Rajanna, 2 nd partner of the Defendant No.1 firm is not managing the affairs of the Defendant No.1 firm. Witness volunteers that the said 2 nd partner is jointly managing the affairs of the Defendant No.1 firm.
I do not have an impediment to produce the Partnership deed of Defendant No.1 Corporation.
Defendant No.1 firm has come into existence in the year 1997. Witness volunteers that Defendant No.1 firm is not operating any transaction since decade.
Que: Whether have you intimated non operational system of Defendant No.1 firm either to the Registrar of the Firms under which it is registered or to the Income Tax Department."
As per this evidence, DW.1 contends that, Defendant No.1 firm is registered with the Registrar of firms. It is having two partners viz., the Defendant No.2 and one Rajanna, S/o Kempanna, R/o K.G. 12 OS No.26151/2018 Pura, Shidalaghatta Taluk. The 2 nd partner Rajanna does not reside at Bengaluru. Further admits that, the said Rajanna, 2nd partner of the Defendant No.1 firm is not managing the affairs of the Defendant No.1 firm. Witness volunteers that the said 2 nd partner is jointly managing the affairs of the Defendant No.1 firm. He has no any impediment to produced the Partnership Deed of Defendant No.1 Corporation.
Further contends that Defendant No.1 firm has come into existence in the year 1997 and the same is not operating any transaction, since decade. On questioning, whether he has intimated non operational system of Defendant No.1 firm, either to the registrar of firms under which it is registered, or to the Income Tax department. He replies that there is no need to intimate the said authorities.
10.05. DW.1 has not produced any authorization, either issued by the Defendant No.1 firm in his favour, or issued by the partners of the Defendant No.1 firm, in his favour.
13 OS No.26151/201810.06. The Learned Counsel for the Plaintiff would contend that, an adverse inference is to be drawn against the DW.1, projecting himself to be an authorized representative of Defendant No.1 firm and not the Managing Partner of Defendant No.1 firm, U/ Sec.114(g) of the Evidence Act.
10.07. When DW.1 specifically contends that, he is not the Managing Partner and he is the Authorized Signatory, then it was for him to produce some cogent evidence, in the form of documentary evidence, to show that, he has been authorized by the Defendant No.1 firm, to perform all the activities of the Defendant No.1 firm.
Though DW.1 contends that, he has no impediment to produce the authorization given to him by the firm. Under such circumstances, when DW.1 has failed to produce the same, necessarily an adverse inference is required to be drawn against him, for contending that, he is only the authorized signatory of the Defendant No.1 firm and not the Managing Partner.
14 OS No.26151/201810.08. The Defendants have appeared in this suit by engaging a counsel, as per the Vakalathnamma, filed on behalf of the Defendants on 15.12.2018. On perusal of the said Vakalathanamma Defendant No.1 has also signed the said Vakalathanamma, by affixing a rubber stamp, which reads as, "Managing Partner, NIKHARA FINANCE CORPORATION (R)".
10.09. The Defendants have produced POA executed by Defendant No.2 infavour of Defendant No.1 authorizing him to represent her, in this case.
If the first line of defence of the Defendants is taken into consideration, then, when either the Defendant No.1 firm, or its partners have authorized DW.1, as an authorized signatory, then what was the necessity to have a document like POA-Ex.D.1.
Existence of the POA-Ex.D1 will also falsify the said stand of the Defendants.
10.10. On the basis of above ocular and documentary evidence, it can be said that, DW.1 is looking after the affairs and management of Defendant No.1 firm.
15 OS No.26151/2018So I do not find any stuff in the contention of the Learned Counsel for the Defendants that, DW.1 is neither a proper party nor a necessary party to this suit.
11. The second line of contention raised by the Learned Counsel for the Defendants that, the Defendant No.2 is not the proper party to this suit. Further he would contend by placing his reliance to the portion of cross-examination of PW.1 at Page No.6, Para No.2, which reads as under:-
"I have not personally met the Defendant No.2 either prior to the date of transaction in question or subsequent to it."
Plaintiff has admitted that, he is not having any transaction with the Defendant No.2.
On careful perusal of the said portion of cross- examination of PW.1, it can be seen that, the Plaintiff/PW.1 contends that, he has not personally met the Defendant No.2 either prior to the date of transaction in question or subsequent to it. This does not mean that, the Plaintiff has admitted that, he was not having any transaction with the Defendant No.2.
16 OS No.26151/201811.01. Coming to the ocular evidence, more specifically, cross-examination of DW.1, at Page No.5, Para No.3, which reads as under:-
"Defendant No.1 firm is registered with the Registrar of firms. It is having two partners viz., the Defendant No.2 and one Rajanna, S/o Kempanna, R/o K.G. Pura, Shidalaghatta Taluk. The 2nd partner Rajanna does not reside at Bengaluru. It is true to suggest that the said Rajanna, 2nd partner of the Defendant No.1 firm is not managing the affairs of the Defendant No.1 firm. Witness volunteers that the said 2nd partner is jointly managing the affairs of the Defendant No.1 firm."
As per this evidence, DW.1 contends that, Defendant No.1 firm is registered with the Registrar of firms. It is having two partners i.e., Defendant No.2 and one Rajanna S/O: Kempanna. The second partner i.e., Rajanna is not residing at Bengaluru and is not Managing the affairs of the Defendant No.1 firm. But he contends that, the said second partner is jointly managing affairs of the Defendant No.1 firm.
11.02. On the basis of above ocular evidence, it can be said that, the Defendant No.2 being one of the partners of the Defendant No.1 firm, will be a necessary party to this suit.
17 OS No.26151/2018So I do not find any stuff in the contention of the Learned Counsel for the Defendants that, Defendant No.2 is neither a proper party nor a necessary party to this suit.
12. The third line of defence takenup by the Learned Counsel for the Defendants is that, the Plaintiff contends that, he has invested his money in the various ongoing projects known as Nikhara Bharat Constructions Company Ltd., and not in Nikhara Finance Corporation Ltd., So the present suit against the Defendant No.1 is not maintainable.
12.01. Percontra, the Learned Counsel for the Plaintiff would contend that, the Defendant No.1 firm and DW.1 has utilized the money invested by the Plaintiff in their ongoing housing projects, one amongst them, situate at Kallenahalli Village, Mandya District.
12.02. Coming to the ocular evidence, more specifically, cross-examination of DW.1, at Page No.11, Para Nos.1 to 3, which read as under:-
"It is true to suggest that I am owning the lands- Residential Layout Kallenahalli, 18 OS No.26151/2018 Village in Kothathi Hobli of Mandya District, in the name of M/s Nikhara Bharat Construction Company Ltd., It is true to suggest that as per the Order of Deputy Commissioner, Mandya bearing Nos. Nos. ALN (1) 131/2012-13, dtd.25.06.2015; ALN (1) 136/2012-13, dtd.02.08.2016; and ALN (1) 31/2012-13, dtd.14.07.2017, the land have been got converted for there non agricultural use in my name and in the name of my wife. Witness volunteers that the name of the his wife is appearing as the Director of M/s Nikhara Bharat Construction Company Ltd., Witness further volunteers that his name is not appearing in the said orders.
It is false to suggest that, the money which I received under the Defendant No.1 firm, I have invested the same in M/s Nikhara Bharat Construction Company Ltd., in the lands got converted under the above said Orders passed by the Deputy Commissioner, Mandya. The said converted lands are still in the name of M/ Nikhara Bharat Construction Company Ltd.,"
As per this evidence, DW.1 admits that, he is owning the lands- residential layout at Kallenahalli Village, Kothathi Hobli of Mandya District in the M/s Nikhara Construction Company Ltd., Further admits that, agricultural land has been got converted for its non agricultural use, as per the Order of the Deputy Commissioner Mandya, bearing Nos. ALN (1) 131/2012-13, dtd.25.06.2015; ALN (1) 136/2012- 19 OS No.26151/2018 13, dtd.02.08.2016; and ALN (1) 31/2012-13, dtd.14.07.2017. Further admits that, the said converted lands are standing in his name and in the name of his wife, as the Director of M/s Nikhara Bharat Construction Company Ltd., Further contends that, his name is not appearing in the said orders. But denies the suggestion made to him that, he has utilized the money received by him under Defendant No.1 firm in M/s Nikhara Bharat Construction Company Ltd., in the lands got converted, under the orders of the Deputy Commissioner, Mandya. But contends that, the said converted lands are still standing in the name of M/s Nikhara Bharat Construction Company Ltd.,.
12.03. The Plaintiff has produced the On- demand Promissory Note at Ex.P1. On the face of this document, it can be seen that, the said document is issued by the Nikhara Finance Corporation (R) and not the M/s Nikhara Bharat Construction Company Ltd., 20 OS No.26151/2018 12.04. Thus, on the basis of the above ocular evidence, more specifically, on the basis of admission of the DW.1, as well as on the basis of documentary evidence, more specifically, Ex.P1 it can be said that, the Defendant No.1 firm through DW.1 and Defendant No.2 have owned the converted lands, under the name M/s Nikhara Bharat Construction Company Ltd., Under such circumstances, I do not find any stuff in the submissions of the Learned Counsel for the Defendants to contend that, the Plaintiff has takenup transaction with M/s Nikhara Bharat Corporation Ltd., and not with Nikhara Finance Corporation (R).
13. The fourth line of defence takenup by the Learned Counsel for the Defendants is of two folds;
a) that the Promissory Note-Ex.P1 is not presented, as required under Sec.64 of NI Act;
b) that the Promissory Note-Ex.P1, is not on sufficient stamp and Revenue stamp is affixed, on it, which is not permissible, in the State of Karnataka.
21 OS No.26151/201813.01. Coming to the first point, withregard to presentation of Promissory Note-Ex.P1.
Sec.64 of the Negotiable Instrument Act, 1881, reads as under:-
"Promissory notes, bills of exchange and cheques must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder as hereinafter provided. In default of such presentment, the other parties thereto are not liable thereon to such holder. 2[Where authorized by agreement or usage, a presentment through the post office by means of a registered letter is sufficient.] Exception) --Where a promissory note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof. 3[(2) Notwithstanding anything contained in section 6, where an electronic image of a truncated cheque is presented for payment, the drawee bank is entitled to demand any further information regarding the truncated cheque from the bank holding the truncated cheque in case of any reasonable suspicion about the genuineness of the apparent tenor of instrument, and if the suspicion is that of any fraud, forgery, tampering or destruction of the instrument, it is entitled to further demand the presentment of the truncated cheque itself for verification:
Provided that the truncated cheque so demanded by the drawee bank shall be 22 OS No.26151/2018 retained by it, if the payment is made accordingly.]"
As per the exception, no presentation is required, in order to charge the maker, when a Promissory Note is payable on demand and is not payable at a specified place.
13.02. On perusal of Ex.P1- Promissory Note, there is a condition stipulated therein, which can be seen as per the blue rubber stamp, which says, "Payable on demand/@ 12 months with interest". As per this condition, on demand Promissory Note-Ex.P1 is payable on demand. When it is payable on demand, it comes within the ambit of exception to Sec.64 of NI Act, for which no presentation is required.
13.03. Coming to the second point, withregard to payment of stamp duty and affixture of Revenue stamp on Promissory Note-Ex.P1.
As per Art. 52 of the Karnataka Stamp Act, which deals with transfer, which reads as under:-
23 OS No.26151/2018Art. 52. Transfer- (Whether with or without consideration)-
(a) of debentures, being Fifty paise for every rupees marketable securities, whether one hundred or part thereof the debentures is liable to duty subject to a maximum of or not. one thousand rupees for a consideration equal to the face value of the debenture.
(b) of any interest secured by bond, mortgage deed or policy of insurance-
(i) if the duty on such bond, The duty with which such mortgage-deed or policy does bond, mortgage deed; or not exceed twenty-two rupees policy of insurance is and fifty paise; chargeable; (ii) in any other case; One hundred rupees (c) of any trust property under One hundred rupees Section 25 of the administrator Generals Act, 1963; (d) of any trust property from The same duty as a one trust to another trust or conveyance [under Article from Trust to turstee or 20 (1)] on the market value beneficiary, or from trustee to of the property (which is the
trust or trustee or beneficiary, subject matter of such as the case may be. transfer) or consideration for such transfer, whichever is higher.
Provided that for the public religious and charitable trusts, the duty for such transfer shall be rupees one thousand.] 24 OS No.26151/2018 Exemptions:
Transfers by endorsement:-
(a) of a bill of exchange, cheque or promissory note;
(b) of a bill of lading, delivery order, warrant for goods or other mercantile document of title to goods
(c) of a policy of insurance;
(d) of securities of the Central Government or of State Government.
As per the exemptions (a) transfer of endorsement of a bill of exchange, Cheque or Promissory Note, does not require Stamp Duty.
13.04. As per Sec.4 of the NI Act, 1881, a Promissory Note is an instrument in writing, not being a blank note or a currency note, containing an unconditional undertaking to pay a certain sum of money, signed by the maker, to a certain person, or to the order of such certain person or to the bearer of the said instrument.
13.05. As per the decision of the Hon'ble High Court of Karnataka, in the case of Papanna V/s R. Subaiah Setty, reported in 1972 Mys. L.J. Short note 224, wherein it is held that;
25 OS No.26151/2018"In cases of transfer by bill of exchange, the endorsement need not be stamped."
13.06. Promissory Note is also a bill of exchange. It comes within the ambit of exception to Art.52 of the Karnataka Stamp Act. Hence, Promissory Note need not be stamped.
13.07. Thus, Ex.P1-Promissory Note in the present case need not be presented, within the meaning of Sec.64 of NI Act, as it is payable on demand. So also, it need not be stamped, as it comes within the ambit of exception (a) to Art.52 of the Karnataka Stamp Act.
Hence, no force is found in the submission of the Learned Counsel for the Defendants.
14. The fifth line of defence takenup by the Learned Counsel for the Defendants is that, DW.1 was in a habit of keeping a signed blank documents in his office and accordingly he had kept On-demand Promissory Note, with his signatures, in his office. And the said On-demand Promissory Note was 26 OS No.26151/2018 picked up by the Plaintiff from the office of the Defendant No.1 firm.
Percontra, the Learned Counsel for the Plaintiff would contend that, Ex.P1-On-demand Promissory Note is not only signed by DW.1, but also it contains the rubber stamps, suggesting the conditions stipulated and suggesting the conclusion of the document.
14.01. Coming to the ocular evidence, on this point, more specifically,
a) cross-examination of PW.1 at Page No.7, Para No.4, which read as under:-
"It is false to suggest that I have picked up Ex.P1 Promissory Note which was signed and kept by Mr. Kodandaram P. Managing Partner of Defendant NO.1 - Corporation, without his consent, from his office, when I had gone to his office to meet him."
As per this evidence, PW. 1 denies the suggestion made to him that, on behalf the Defendants that, he has picked up Ex.P1-Promissory Note which was signed and kept by Kodandarama. P, Managing Partner of Defendant No.1 Corporation, 27 OS No.26151/2018 without his consent, from his office, when PW.1 had gone to his office to meet him.
b) cross-examination of PW.1 at Page No.8, Para No.4, Line Nos.4 to 8, which read as under:-
".... It is false to suggest that, since I have staled the Promissory Note-Ex.P1 from the office of Kodandaram P.-Managing Partner of Defendant No.1 Corporation, so I was not aware as to who has affixed the signature on Ex.P1, so I had mentioned in Ex.P2 that, Defendant No.1 is represented by its Managing Partner Sri. K. Rauf."
As per this evidence, PW.1 denies that, since he has staled the Promissory note-Ex.P1 from the office of Kondandaram P. - the Defendant No.1 Corporation, so he was not aware as to who has affixed the signatures on Ex.P1, so as to mentioned in Ex.P2 that, Defendant No.1 is represented by its Managing Partner Sri. K. Rauf.
c) as per the cross-examination of DW.1 at Page No.12, Para Nos.3 and 5, which read as under:-
"I have not lodged any police complaint against the Plaintiff, contending that the Plaintiff has stolen Ex.P.1 On demand Promissory Note and consideration receipt from my Office, till today.
I have not informed the Plaintiff on receipt of either Ex.P.2 or Ex.P.3 that he has stolen Ex.P.1 On demand Promissory Note 28 OS No.26151/2018 and consideration receipt from my Office in writing, but I have informed him orally."
As per this evidence, DW.1 contends that, he has not lodged any police Complaint against the Plaintiff, contending that, he has stolen Ex.P1- On- demand Promissory Note and consideration receipt from his office, till the date of his deposition.
Further DW.1 contends that, he has not informed the Plaintiff on receipt of either notices Ex.P2 or Ex.P3, that he has stolen Ex.P1- On-demand Promissory Note and consideration receipt from his office in writing, but he contends that, he had informed him orally.
14.02. On perusal of the Suit Plaint, the Plaintiff has specifically contended that, DW.1 representing the Defendant No.1 firm had executed On-demand Promissory Note and consideration receipt, on receiving an amount of Rs.20,00,000/-, assuring to repay the said amount on completion of a period of 12 months, with interest @ Rs.11% pa., which the maturity value amount as on the maturity date i.e., 18.11.2017, is Rs.22,20,000/-.
29 OS No.26151/2018When the Plaintiff has contended in Suit Plaint. It was for the Defendants to contend in their Written Statement that, Ex.P1- On-demand Promissory Note and consideration receipt, was stolen by the Plaintiff from the office of the Defendant No.1 firm. But no such contentions are coming forth from the side of the Defendants.
14.03. Further the Plaintiff has contended in the Suit Plaint, he had issued the notice followed by re-joinder to the Defendant No.1 firm.
Though the Defendants have admitted receipt of the notice followed by the re-joinder, but have failed to reply either the notice or the rejoinder, defending that, On-demand Promissory Note and consideration receipt was stolen by the Plaintiff and the same was not issued by the Defendant No.1 firm, towards repayment of any amount to the Plaintiff.
14.04. Further under the given situation a man of ordinary prudence, ought to have, lodged a complaint with the police authorities, alleging that, the Plaintiff has stolen the On-demand Promissory Note and consideration receipt. But the Defendants, 30 OS No.26151/2018 muchtheless, the Defendant No.1 firm or DW.1have not lodged any complaint against the Plaintiff, inorder to substantiate their contention, that Ex.P1- On-demand Promissory Note and consideration receipt was stolen by the Plaintiff.
14.05. In the presence of the documentary evidence, more specifically, Ex.P1; ocular evidence, more specifically, admissions on the part of DW.1, admitting his signatures on Ex.P1 as Ex.P1(A) and Ex.P1(B); and in the absence of any cogent evidence from the side of the Defendants to substantiate their defence, that the Plaintiff has stolen the signed blank On-demand Promissory Note and consideration receipt-Ex.P1 from the office of the Defendant No.1 firm. Under such circumstances, the defence taken up by the Defendants cannot be believed at all.
15. The sixth line of defence, putforth by the Learned Counsel for the Defendants that, the Plaintiff has no capacity to pay an amount of Rs.20,00,000/- to the Defendants. This can be seen as per the cross-examination of PW.1 at Page No.11, Para No.2, which reads as under:-
31 OS No.26151/2018"It is false to suggest that I was not having any capacity to pay the Rs. 20,00,000/- to the Defendant - Corporation through Kodandaram P. its Managing Partner. I have not produced the income tax returns since, I have not shown the said transaction in it. It is false to suggest that I am deposing falsely that I have exhibited the transaction in question, in my income tax returns."
As per this evidence, the Plaintiff/PW.1 has denied the suggestion made to him on behalf of the Defendants that, he is not having capacity to pay Rs.20,00,000/- to the Defendants- Corporation through Kodandaram P.- Managing Partner. Further denies that, he has not produced Income tax returns, since he has not shown the said transaction in it.
15.01. Firstly, the Defendants have not pleaded in their Written Statement, denying the capacity of the Plaintiff to pay Rs.20,00,000/- to the Defendants.
15.02. Secondly, when the Plaintiff contends that, the Defendants have executed the On- demand Promissory Note, as per Ex.P1, then the onus shifts on the Defendants, to prove. On proof again the onus shifts to the Plaintiff. On production 32 OS No.26151/2018 of Ex.P1 onus shifts to the Defendants, but the Defendants have not placed any materials, to displace the proof. So the Defendants have failed to discharged the onus of proof placed on them.
15.03. Under such circumstances, the contention of the Learned Counsel for the Defendants, losses its force, to deny the capacity of the Plaintiff to pay an amount of Rs.20,00,000/-.
16. The seventh line of defence takenup by the Defendants, that the notice followed by the rejoinder issued by the Plaintiff, under Ex.P2 and Ex.P3, is not proper, to hold the Defendants liable.
16.01. Coming to the ocular on this point, more specifically,
a) cross-examination of PW.1, at Page No.8, Para No.4 and Page No.9, Para No. 2, which reads as under:-
"It is true to suggest that I have issued Ex.P2 - Legal Notice to the Defendant NO.1- Corporation on 03.07.2018, wherein it is stated that Defendant NO.1 is represented by its Managing Partner Sri. K. Rauf. It is false to suggest that since, I have staled the 33 OS No.26151/2018 Promissory Note - Ex.P1 from the office of Kodandaram P. - Managing Partner of Defendant No.1- Corporation, so I was not aware as to who has affixed the signature on Ex.P1, so I had mentioned in Ex.P2 that, Defendant No.1 is represented by its Managing Partner Sri. K. Rauf.
It is false to suggest that I have issued rejoinder notice dt. 30.08.2018, by rectifying the name of Managing Partner, in order to overcome the mistake."
As per this evidence, Plaintiff/PW.1 admits the suggestion made to him on behalf of the Defendants that, he has issued Ex.P2 legal notice to the Defendant No.1 Corporation on 03.07.2018, wherein it is stated that, the Defendant No.1 is represented by its Managing Partner Sri. K. Rauf. But denies that, since he had stolen the Promissory Note-Ex.P1 from the office of Kodandarama. P. Managing Partner of Defendant No.1 Corporation, he was not aware, as to who has affixed the signature on Ex.P1, so he has mentioned the name in Ex.P2, as K. Rauf, as a Managing Partner representing the Defendant No.1.
Further denies the suggestion made to him that, he has rectified the name of the Managing Partner in 34 OS No.26151/2018 the rejoinder notice dtd.30.08.2019, inorder to overcome the mistake.
b) cross-examination of DW.1, at Page No.9, Para Nos.2 and 3 and Page No.10, Para No.1, which reads as under:-
"It is false to suggest that as per Ex.P.1 I have received an amount of Rs.20,00,000/- on behalf of Defendant No.1 Firm, returnable on demand after 12 months, with interest at the rate of 11% p.a. Witness volunteers that at that time there was a situation of demonetization, in the Country.
It is true to suggest that we have received Notice as per Ex.P.2. Witness volunteers that the said Notice was issued to the Defendant No.1 mentioning as Represented by its Managing Partner Sri. K. Rauf.
Que : Whether have you replied Ex.P.3 rejoinder Notice, contending that you are not the Managing Partner of the Defendant No.1 Firm ?
Ans : I am not the Managing Partner of Defendant No.1 Firm, so there is no need to reply Ex.P.3 rejoinder Notice."
As per this evidence, DW.1 admits that, they have received notice as per Ex.P2, but volunteers that, the said notice was issued to the Defendant No.1, mentioning as represented by its Managing Partner Sri. K. Rauf.
35 OS No.26151/2018Further admits that, they have received rejoinder notice as per Ex.P3 requesting to rectify the name of the Managing Partner, from K. Rauf to Kodandaram. So also admits that, he has not the replied Ex.P3, but volunteers that, since he is not Managing Partner, so he has not replied the rejonder notice.
Further on questioning, he replies that he is not the Managing Partner of Defendant No.1 Firm, so there is no need to reply Ex.P3-Rejoinder notice.
16.02. The Plaintiff has produced the notice issued to the Defendant No.1 through his counsel on 03.07.2018 at Ex.P2. As per this notice, the addressee shown in the said notice is the Defendant No.1 Corporation, but it is mentioned that, the Defendant No.1 is represented by its Managing Partner Sri. K. Rauf.
The Plaintiff has produced the Rejoinder issued to the Defendant No.1 through his counsel on 30.08.2018 at Ex.P3. As per this Rejoinder, the addressee shown in the said notice is the Defendant No.1 Corporation, but it is rectified as, the Defendant 36 OS No.26151/2018 No.1 represented by its Managing Partner Sri. Kodandaram.
16.03. On perusal of the above ocular and documentary evidence, it can be said that,
a) the Defendant No.1 and DW.1 admits the receipt of the notice-Ex.P2 and the Rejoinder-Ex.P3;
b) DW.1 admits that, he has not replied the Rejoinder-Ex.P3;
c) as per the ocular evidence referred to above DW.1, extends the reason for not replying the said Rejoinder, as he is not the Managing Partner of the Defendant No.1 Corporation. But as per the pleadings of the Defendants, more specifically, the Written Statement at Page No.2, Para No.4, Line Nos.9 to 13, which reads as under:-
"... The further averments in the same para regarding the issue of a legal notice to the Defendants on 03.07.2018 is true. But as the Defendants were in no way liable to make any payment to the Plaintiff, the said legal notice was not replied by the Defendants. ..."
As per this pleadings of the Defendants, the Defendants extend the reason for not replying the notice-Ex.P2, since they are not liable.
37 OS No.26151/2018Two different versions are comingforth from the side of the Defendants, one in the pleadings, that they have not replied Ex.P2-notice, as they were not liable; and the another in the ocular evidence of DW.1, that they have not replied Ex.P3-Rejoinder, as DW.1 is not the Managing Partner of Defendant No.1 Corporation. Both these reasons, run contrary to each other and will not stand, to the reason, to avoid replying either the notice-Ex.P2 or the Rejoinder- Ex.P3.
d) on careful perusal of the postal acknowledgments produced by the Plaintiff, alongwith the notice-Ex.P2, as Ex.P2(B); and alongwith the Rejoinder-Ex.P3, as Ex.P3(B), we will found that, the receiptant has signed the said acknowledgments by affixing a round rubber stamp.
Further the Plaintiff has produced On-demand Promissory Note with consideration receipt, at Ex.P1. On careful perusal of the said document, it can be found that, besides the admitted signatures of DW.1 found on it, as Ex.P1(A) and Ex.P1(B) (marked on confrontation to DW.1), a round rubber seal is affixed.
38 OS No.26151/2018The said round rubber seal affixed on Ex.P1, is the same, as affixed on Ex.P1(A) and Ex.P1(B).
So also, on Ex.P1, the said hologram containing the picture found in the round rubber seal, can be found on the consideration receipt with a number "56501". Even we can find the said picture found on the round rubber seal on the top of the document- Ex.P1, on the face page, as well as on its rare page.
16.04. Considering all these materials, placed on record, coupled with the admissions given by DW1 in his ocular evidence, it can be safely concluded that,
i) Ex.P1 is issued by the Defendant No.1 firm;
ii) Notice-Ex.P2 is received by the Defendant No.1 firm, as per Ex.P2(B), though there is mention of its representation by Sri. K. Rauf;
iii) Rejoinder-Ex.P3 is received by the Defendant No.1 firm, as per Ex.P3(B), though there is mention of its representation by Sri. Kodandaram.
16.05. When the Defendants have contended that, the Plaintiff has stolen Ex.P1-On- demand Promissory Note, then the Defendants, 39 OS No.26151/2018 would have replied either the notice-Ex.P2 or the Rejoinder-Ex.P3, contending so. But the same is not replied.
16.06. Having observed so again no stuff is found in the submission made by the Learned Counsel for the Defendants, to contend that, either the notice-Ex.P2 or the Rejoinder-Ex.P3 is not proper.
17. Considering the material placed on records, in the form of documentary evidence, as well as the ocular evidence of the Plaintiff and the Defendants, it can be concluded that, the Plaintiff has shown that, the Defendant No.1 through DW.1 has executed a Promissory Note alongwith consideration receipt, as per Ex.P1, agreeing to repay an amount of Rs.20,00,000/-, alongwith interest @ Rs.11% pa., on maturity day, i.e., on 18.11.2017, totally an amount of Rs.22,20,000/-, to him.
But the Defendants have failed to substantiate their contention that, the Plaintiff has stolen Ex.P1 from the office of the Defendant No.1.
Consequently, the Plaintiff has proved that, he has invested an amount of Rs.20,00,000/- with the 40 OS No.26151/2018 Defendants and inturn the Defendants have agreed to return the said amount to him alongwith 11% interest. But not at the end of 24 months as contended by the Plaintiff, in Para No.3 of the Suit Plaint.
Hence, I answer ISSUE NO.1 PARTLY IN THE AFFIRMATIVE.
18. ISSUE NO.2:-
As per Ex.P1- On-demand Promissory Note the Defendants have agreed to repay the amount, together with interest @ Rs.11% pa., So the agreed rate of interest is Rs.11% pa., Plaintiff is entitle for interest on Rs.20,00,000/-. The maturity value (Principle with agreed interest from 18.11.2016 to 18.11.2017), will be Rs.22,20,000/-, as on 18.11.2017.
19. The Learned Counsel for the Plaintiff would contend that, since the Defendants are at default, default Clause will be applicable and the Defendants will be liable to pay penal interest, over the maturity amount from 19.11.2017, till its realization, @ Rs.18% pa., 41 OS No.26151/2018
19.01. Keeping in view the nature of the transaction inbetween the Plaintiff and the Defendants; the present scenario, with regard to the slash/diminishing trend in the bank interest rates; it will be just and feasible to award interest @ Rs.8% p.a., as interest, from 19.11.2017 till filing of the suit i.e., 25.09.2018; pendent-lite; and also future interest, at the same rate.
Hence, for the above reasons, I answer ISSUE No.2, PARTLY IN THE AFFIRMATIVE.
20. ISSUE No.3:
The Plaintiff had filed an application at IA No.1 U/Or. 38 Rule 5 of CPC, praying to issue attachment of property before Judgment. On the basis of the undertaking given by the Defendants, through a memo, the said application was disposed-off, on observing that incase if the Plaintiff suceeds, the Plaintiff will have a second charge over the property shown as Schedule under IA No.1, as already there was the first charge of Sundaram Finance, over the said property.42 OS No.26151/2018
Inview of answreing Issue No.1 Partly in the Affirmative, the attachment of the said property, by creating the second charge over it, is made absolute.
It is needless to mention that, if the Plaintiff on the basis of the present decree, if approaches to the concern Sub-Registrar, within whose jurisdiction the Schedule property is situated, with a request to create a second charge over the said property. It is believe that, the concerned Sub-Registrar, will create the second charge over the said property, to the extent of the decreetal amount, as per law.
21. Thus, inview of my findings on Issue Nos.1 and 2, Partly in the Affirmative, the Plaintiff is entitle to recover an amount of Rs.22,20,000/- from the Defendants, with interest. Hence, I proceed to pass the following:
ORDER The suit of the Plaintiff is Partly Decreed, with costs.
The Defendants are directed to pay an amount of Rs.22,20,000/-, to the Plaintiff with interest at the rate of Rs.8% p.a. from 19.11.2017, till its realization, within a period of 43 OS No.26151/2018 three months from the date of this Order.
Incase of further default on the part of Defendants, the Plaintiff will be entitled to receive the decreetal amount with penal interest of Rs.2% p.a. i.e., total interest 8%+2%, from 14.11.2021, till its realization.
Order of attachment before Judgment passed on IA No.1, is made Absolute.
It is needless to mention that, the Jurisdictional Sub-Registrar has to create second charge over the property shown as the Scheduled property, under IA No.1, to the extent of the decreetal amount, on an application of the Plaintiff.
Draw decree accordingly.
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(Dictated to the Stenographer directly on computer system, computerized by her and print out taken by her, after correction, signed and pronounced by me in the open court on this the 13th day of August, 2021.) [Abdul-Rahiman. A.Nandgadi] LXXII Addl.City Civil & Sessions Judge, Bengaluru. (CCH-73) 44 OS No.26151/2018 Scheduled of Property under IA No.1:-
All that piece and parcel of Property bearing No.27, Old No.144, Situated at 10 th Main Road, Srinagar, Banashankari 1 st Stage, Bengaluru- 560 050 with PID No.53-10-27, measuring East to West:60 feet and North to South:40 feet, in all 2400 Sq.ft., consisting of Ground, first, second and third floor building.
And bounded on:
East by: Road;
West by: site No.121;
North by: site No.143;
South by: site No.145;
[Abdul-Rahiman. A.Nandgadi] LXXII Addl.City Civil & Sessions Judge, Bengaluru. (CCH-73) 45 OS No.26151/2018 ANNEXURES:-
LIST OF WITNESSES EXAMINED FOR THE PLAINTIFF:
PW.1: Sri. Venkatesh H. S. LIST OF EXHIBITS MARKED FOR THE PLAINTIFF:
Ex.P.1: Demand promissory note alongwith consideration receipt.
Ex.P.2, Ex.P2(A) and (B): Legal Notice dtd.03.07.2018 with postal receipt and postal acknowledgment.
Ex.P.3, Ex.P3(A) & (B): Office copy of the notice dtd.30.08.2018 alongwith postal receipt and postal acknowledgment.
Ex.P.4: Khata extract.
Ex.P.5: Property tax receipt. Ex.P.6: Encumbrance certificate. Ex.P.7: Agreement of Sale dtd.06.10.2016. Ex.P.8 & Ex.P9: Two registered Sale Deeds dtd.29.06.2007.
Ex.P10 & Ex.P11: 2 R/R Extract.46 OS No.26151/2018
LIST OF WITNESSES EXAMINED FOR THE DEFENDANTS:
DW.1: Sri. Kodandaram.
LIST OF EXHIBITS MARKED FOR THE DEFENDANTS:
Ex.D.1: GPA executed by the Defendants.
[Abdul-Rahiman. A.Nandgadi] LXXII Addl.City Civil & Sessions Judge, Bengaluru. (CCH-73)