Karnataka High Court
B R Venkatesh vs M/S Mallika Arecanuts Pvt Ld on 28 March, 2018
Author: H.B.Prabhakara Sastry
Bench: H.B.Prabhakara Sastry
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 28TH DAY OF MARCH, 2018
BEFORE
THE HON'BLE DR.JUSTICE H.B.PRABHAKARA SASTRY
REGULAR SECOND APPEAL NO.1022/2012
BETWEEN:
B.R. Venkatesh
S/o. Ramabhatru,
Age 54 years,
Occ: Agriculture & Business,
R/o. Brahmanabedur,
Post Kalmane,
Sagar Taluk - 577 401,
Shimoga District. ... Appellant
(By Sri. S.V. Prakash, Adv.)
AND:
M/s. Mallika Arecanuts (Pvt) Ltd.,
Areca Merchants &
Commission Agents,
No.19, APMC Yard,
Sagar City - 577 401,
Shimoga City,
Represented by its
Managing Director. ... Respondent
(By Sri. Udaya Prakash Muliya, Adv. for
Sri. I. Tharanath Poojary, Adv.)
R.S.A.No.1022/2012
:2:
This RSA is filed U/S. 100 of CPC against the Judgment
and Decree dated:31.01.2012 and the order dated:4.9.2012
passed in IA U/order 47 of CPC, in R.A. No.56/2008 on the
file of Additional District Judge, Shimoga, partly allowing the
appeal and modifying the Judgment and Decree
dated:15.02.2008 passed in OS No.32/1999 on the file of
Civil Judge (Sr. Dn.) Sagar.
This Appeal having been heard and reserved for
judgment on 20.03.2018, coming on for pronouncement of
Judgment, this day the Court delivered the following:
JUDGMENT
The present appellant was the defendant in the Court of the Civil Judge (Sr.Dn.), Sagar, (henceforth for brevity referred to as "the trial Court") against whom the present respondent as a plaintiff had instituted a suit in O.S.No.32/1999 for recovery of a sum of `1,83,039/- together with interest thereupon.
2. The summary of the case of the plaintiff in the trial Court was that the plaintiff is a Private Limited Company and trading in areca nuts at APMC Yard, Sagar Town, Sagar, Shimoga District. The defendant as a grower of the areca nuts had contacted the plaintiff- R.S.A.No.1022/2012 :3: Company to sell the areca grown by him through the plaintiff's / his agency. The defendant also demanded for payment of advance amount and agreed to pay interest at the rate of the plaintiff's / business usage. The defendant also agreed that he would supply areca nuts to the plaintiff for its sale. In pursuance of the same and upon the oral understanding between the parties, the plaintiff lent a sum of `20,000/- to the defendant by opening an account with it. The defendant had signed the roza book maintained by the plaintiff with respect to the said transaction at the end of accounting year. The outstanding due amount was carried over to the subsequent years also, as such, in the accounting year 1994-95 defendant was found due in a sum of `82,473/-. The defendant agreed and acknowledged the same by signing the accounts extract. He also agreed to repay the said amount with interest at 24% per annum. Similarly, at the end of accounting R.S.A.No.1022/2012 :4: year 1995-96, the due amount was in a sum of `81,850/-; for the year ending 1996-97, the said due by the defendant was in a sum of `1,80,110/-. The defendant agreed and acknowledged the said liability by signing the accounts extract on 31.03.1997. Thereafter, the defendant stopped carrying its business transaction with the plaintiff and also did not repay the loan amount. In that regard, a legal notice was issued upon the defendant by the plaintiff which was served upon him on 03.10.1998. Despite the same, the defendant since failed to repay the loan amount, the plaintiff was constrained to institute the suit against him for recovery of a sum of `1,83,039/- together with interest at the rate of 24% per annum.
3. In response to the notice, the defendant appeared through his counsel before the trial Court and filed his written statement, wherein he admitted that he was an areca grower and that he would sell his areca to R.S.A.No.1022/2012 :5: the plaintiff and had availed an advance loan from the plaintiff. However, he denied that he had agreed to pay any compound interest on the said sum. But the agreed rate of interest was only at the rate of 15% per annum. He further denied that the outstanding liability as stated by the plaintiff as at the end of the year 1994-95, 1995-96 and 1996-97 were all not true. He further contended that at three dates he had repaid a considerable portion of the loan amount, the deduction of which has not been accounted by the plaintiff. He further contended that he had invested a sum of `1,00,000/- in fixed deposit with plaintiff for which the plaintiff had agreed to pay interest at the rate of 22% per annum. But, so far the plaintiff has not repaid the said amount and the interest thereupon. He also contended that the transaction is prohibited by the Karnataka Money Lenders Act, 1961, since the plaintiff has not obtained money lending licence under the said R.S.A.No.1022/2012 :6: Act. Based on the pleadings of the parties, the trial Court framed the following issues:
(i) Whether the plaintiff proves that the defendant had agreed to pay the compound interest at the rate of 24% per annum?
(ii) Whether the defendant prove that on 28.05.1999, he had repaid a sum of `50,000/-?
(iii) Whether the plaintiff proves that as on 31.03.1997, the defendant was liable to pay it a sum of `1,18,110/-?
(iv) Whether the suit is filed within the period of limitation?
(v) Whether the plaintiff is entitled for the relief sought for?
(vi) What order or decree? R.S.A.No.1022/2012 :7: Additional issue: Whether the defendant proves that plaintiff is engaged in money lending
business without obtaining the licence, as such, not entitled for any reliefs?
4. In support of his case, the plaintiff got himself examined as PW-1. He has also got produced and marked the documents from Exs.P1 to P14. On behalf of the defendant, defendant got himself examined as DW-1. He has also got the documents marked from Exs.D1 to D3.
5. The trial Court after hearing both side and considering the material placed before it answered issue Nos.1 to 5 in affirmative and additional issue No.1 in negative, by its judgment and decree dated 15.02.2008 partly decreed the suit of the plaintiff with costs. R.S.A.No.1022/2012 :8:
6. Being aggrieved by the judgment and decree passed by the trial Court, the plaintiff preferred an appeal before the Court of the Additional District Judge at Shimoga (henceforth for brevity referred to as "the First Appellate Court") under Order XLI Rule 1 read with Section 96 of the Code of Civil Procedure, 1908, in R.A.No.56/2010. The respondent therein appeared before the court and contested the matter.
7. The First Appellate Court framed the following points for its consideration:
i) Whether the finding of the trial Court that the defendant is liable to pay the decree amount is justified.
ii) Whether the suit is barred by S.84 of the APMC Act?
iii) Whether the suit is hit by Karnataka Money Lenders Act?R.S.A.No.1022/2012 :9:
iv) Whether Plaintiffs company is registered under the Companies Act?
v) Whether the Managing Director has been authorised to represent the plaintiff's company in the present suit?
After hearing both side, the First Appellate Court answered point Nos.1, 4 and 5 in affirmative, 2 and 3 in negative and by its judgment and decree dated 31.01.2012, dismissed the appeal filed by the appellant. The appellant thereafter, preferred a review application under Order LXVII Rule 1 of Code of Civil Procedure, 1908 and the same has been allowed in part modifying the decree passed by the Trial Court confining it to the rate of interest and the period of interest vide order dated 09.04.2012.
8. Being aggrieved by the judgment and decree passed by the First Appellate Court, the defendant has preferred this appeal.
R.S.A.No.1022/2012: 10 :
9. The appeal was admitted to consider the following substantial questions of law:
1) "Whether the suit of the plaintiff is maintainable in the absence of sanction issued by APMC in terms of Section 84(4) of APMC Act?
2) Whether the suit filed by the plaintiff company for recovery of amount from the defendant is barred by law of limitation and whether the Courts are justified in holding that the suit claim of the plaintiff company is not barred by time?"
10. In response to the notice, the respondent is being represented by his Counsel.
11. The lower court records were called for and the same are placed before the Court.
R.S.A.No.1022/2012: 11 :
12. Heard arguments of learned Counsel from both side. Perused the materials placed before this Court.
13. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court.
14. The alleged loan transaction between the parties is not in dispute. The defendant in his written statement itself has admitted about he availing an 'advance loan' from the plaintiff. However, he has denied the alleged outstanding liability as claimed by the plaintiff. On the said issue, both the Courts after analyzing the materials placed before it including the evidence lead by the parties, have held that the plaintiff is entitled for recovery of a sum of `1,33,039/- together with interest thereupon. The defendant after loosing his regular appeal in R.A.No.56/2008 before the First Appellate Court, preferred a review petition under Order R.S.A.No.1022/2012 : 12 : LXVII Rule 1 of the Code of Civil Procedure, 1908 which came to be allowed by the order dated 09.04.2012 passed by the First Appellate Court, wherein it modified the judgment and decree of the trial Court holding that the plaintiff was entitled to recover a sum of `1,33,039/- with interest at the rate of 9% p.a., from 29.05.1999 till the date of decree and from the date of decree till the date of realization from the defendant. Thus, the finding of both the Courts regarding loan transaction between the parties, being a concurrent finding of fact by both the Courts below, the same need not be analysed in this appeal.
15. The first substantial question of law framed in this appeal is with respect to the maintainability of the suit in the absence of sanction issued by APMC under Section 84(4) of The Karnataka Agricultural Produce Marketing (Regulation and Development) Act, 1966 R.S.A.No.1022/2012 : 13 : (henceforth for brevity referred to as "APMC Act"). Section 84 of the APMC Act reads as below:
84.Provision for settlement of disputes:-
(1) For the purpose of settling disputes between producers, buyers and sellers, or their agents, including any disputes regarding the quality or weight of, or payment for, any agricultural produce, or any matter in relation to the regulation of marketing of agricultural produce in the [market yard, market sub-yard or sub-
market yard, as the case may be], the market committee of that area shall appoint a panel of arbitrators periodically consisting of agriculturists, traders and commission agents, and constitute a Disputes Committee from among its members in such manner as may be prescribed.
(2) Rules shall be made regulating the procedure for settlement of disputes, the authority or authorities for settling the R.S.A.No.1022/2012 : 14 : disputes and appeals from the decisions of such authorities, payment of fees by parties for settlement of disputes, by an arbitrator or arbitrators and all other matters connected with such settlement including the extent to which the provisions of the Arbitration Act, 1940, shall be applicable to arbitrations under this section.
(3) Subject to the rules made under sub-section(2), a market committee may make bye-laws regulating the details in respect of settlement of disputes relating to transactions in notified agricultural produce in the market area.
(4) Notwithstanding anything contained in any law, no suit or other legal
proceeding shall be entertained by any Court in respect of disputes referred to in sub-section(1), without the previous sanction of the market committee.
R.S.A.No.1022/2012: 15 :
16. According to the learned counsel for the appellant as per Section 84(4) of the APMC Act, before instituting the suit, the plaintiff should have obtained previous sanction of the market Committee. According to the learned counsel for the appellant, in view of the fact that admittedly, such a previous sanction since has not been obtained by the appellant, the appeal is not maintainable.
Learned counsel for the respondent in his argument submitted that no such plea regarding non maintainability since has taken by the defendant at the earliest point of time, as such, in his written statement filed in the trial Court, he is precluded from taking any such contention in this second appeal. In support of his argument, he also relied upon the judgment of a Division Bench of Dharwad Bench of this Court dated 28.07.2017 delivered in RFA No.4144/2013 (Mon). R.S.A.No.1022/2012 : 16 :
17. It is not in dispute that the plaintiff is a trader and doing the commission agency in the areca nuts, having its principal place of business at No.19, APMC Yard, Sagar Town, Sagar, Shimoga District. It is also not in dispute that the defendant is a grower of areca nuts and had agreed to sell the areca nuts grown by him to the plaintiff company. It is in that connection, the defendant had availed an advance loan by the plaintiff. Therefore, the loan transaction between the parties is in the form of an 'advance loan' by a trader to a producer in the APMC yard, as such, their activity falls under Section 84(1) of the APMC Act. By virtue of Sub Section (4) of the same section, no suit or other legal proceeding shall be entertained by any Court in respect of any dispute referred to in Sub Section (1), without the previous sanction of the market committee. Admittedly, in the instant case, the plaintiff has not R.S.A.No.1022/2012 : 17 : obtained any previous sanction of the market committee before institution of the original suit in the trial Court.
18. Admittedly, the defendant has not taken any plea in his written statement about non maintainability of the suit under Section 84(4) of the APMC Act. However, considering the fact that the suggestion regarding non maintainability of the suit in view of Section 84(4) of the APMC Act was made to the plaintiff witness (PW) No.1 in his cross examination, the trial Court in its judgment has also dealt with the said aspect, even in the absence of any specific issue on the said point and opined that the alleged transaction would not fall under Section 84(1) of the APMC Act, as such the suit is not hit by Section 84(4) of the APMC Act. The similar view was reiterated by the First Appellate Court also which has held that the alleged loan transaction between the parties is out of the purview of Section 84(1) of the APMC Act and that the alleged loan R.S.A.No.1022/2012 : 18 : transaction was a mere loan transaction between the plaintiff and the defendant as a creditor and the debtor but not in the relationship as an agent and the grower. However, as observed above, the loan transaction being in the form of an advance loan paid by a trader in an APMC Yard to the producer of the agricultural produce on the condition that the said producer would supply his future agricultural produce to the trader / lender only and to none else. Thus, the matter falls within the ambit of Section 84(1) of the APMC Act. However, as has been observed above, no such specific plea has ever taken by the defendant at the earliest in the trial Court in his written statement, as such, there is no plea regarding non maintainability of the suit by virtue of Section 84(4) of the APMC Act.
The division Bench of Dharwad Bench of this Court in Mr.Tallam Babu Vs. J.Gopinath in RFA No.4144/2013 in its judgment dated 28.07.2017 in a R.S.A.No.1022/2012 : 19 : similar circumstance, has observed that the plea regarding alleged non maintainability of the suit in view of Section 84(4) of the APMC Act, since had not been taken up by the defendant at the earliest point of time, now the defendant cannot say that the suit was not maintainable. With the said observation, the Division Bench did not accept the plea of the defendant that the suit was not maintainable by not obtaining prior sanction under Section 84(4) of the Act, in view of the fact that the present facts and circumstances of the case also squarely matches with the said case, the same finding of the Division Bench is applicable in the instant case also, as such, I hold that since the defendant had not taken the plea regarding alleged non maintainability of the suit in view of Section 84(4) of the APMC Act, at the earliest point of time, now he cannot say that the suit was not maintainable. Accordingly, the substantial question of law at point No.1 is answered in affirmative. R.S.A.No.1022/2012 : 20 :
19. The second substantial question of law framed in this matter is regarding limitation. According, to the appellant / defendant, the suit filed by the plaintiff - company was barred by limitation. Still both the Courts below have held that the suit was not barred by limitation, as such, the said finding was erroneous.
20. Learned counsel for the appellant / defendant in his argument submitted that the plaintiff has not given exact date of the loan transaction, however, he has stated that the loan liability was carried over for further years as shown in his books of accounts and is duly acknowledged by the defendant. Thus, the suit of the plaintiff was based on books of accounts for which the Article (1) of the schedule to the Limitation Act, 1963 (henceforth for brevity referred to as "the Limitation Act") applies, according to which, the plaintiff has to prove that the books of accounts are mutual, R.S.A.No.1022/2012 : 21 : open and current account where there were reciprocal demands between the parties.
21. However, the plaintiff has failed to prove that the books of accounts relied upon him were open and current account. In this regard, he relied upon the judgment of the Hon'ble Apex Court in Kesharichand Jaisukhalal Vs. Shillong Banking Corporation Ltd., Shillong (in liquidation) reported in AIR 1965 SC 1711 and drew the attention of this Court to a particular portion of its judgment at Para 10 which reads as below:
(10) Now, in the leading case of Hirada Basappa V.G. Muddappa 6 Mad HC 142 at P.144 Holloway, Acting C.J., observed:
"To be mutual there must be
transactions on each side creating
independent obligations on the other and not merely transactions which create obligations R.S.A.No.1022/2012 : 22 : on the one side, those on the other being merely complete or partial discharges of such obligations."
Learned counsel for the respondent in his argument while drawing attention of this Court to the accounts statement at Exs.P1 to P4, day books at Exs.P7 to P10 and more particularly, to the signatures of the defendants at Exs.P2(a), P3(a) and P4(a) along with acknowledgement note made above the signatures, submitted that those books of accounts are not only open, mutual, current books of accounts and ledgers of the plaintiff, but also bears the acknowledgment of date acknowledged by none else than the defendant, latest by 31.03.1997, as such, the suit has been filed within the period of limitation.
22. Exs.P1 to P4 are the accounts statements of the plaintiff company wherein showing the name of the present defendant as one of the account holder, that R.S.A.No.1022/2012 : 23 : though it has given the details of the transaction made in those accounts with the dates shown against them, it gives a detailed accounts of all the creditor and debtor entries with the details of transactions entered therein. Exs.P7 to P10 are the four day books maintained by the plaintiff - Company, where every days transaction of the company is recorded which are at Exs.P7(a) to P7(c), 8(a), 9(a) and 10(a). The transaction pertains to the defendant has been clearly entered. Thus, the plaintiff has produced accounts statement and the ledger books which as a trader, the plaintiff was maintaining in his day today normal business.
Added to the above, in Ex.P1 in the accounts statement, the first loan of `20,000/- shown as on the date 02.02.1994, by the end of 31.03.1995 his liability outstanding as on that day is shown at `82,473/-. Below that liability, there is an endorsement shown to have been written by the defendant acknowledging the R.S.A.No.1022/2012 : 24 : said outstanding liability as the due payable to him by the plaintiff together with interest thereupon. Below that by affixing the revenue stamp, the defendant is shown to have signed upon it on 31.03.1995 which signature is marked at Ex.P2(a). Similar statement of accounts along with the acknowledgment of debt by the defendant is also there for the subsequent years 1995-96, 1996-97 as could be seen at Exs.P3(a) and P4(a). Those documents also bears the signature of the defendant with the revenue stamps affixed, acknowledging the outstanding liability in favour of the plaintiff. These acknowledgments of debts have extended to limitation under Section 18 of the Limitation Act in favour of the plaintiff. Thus, original suit which is filed on 12.04.1999 is within the period of three years limitation from the date of acknowledgment of debt under Ex.P4(a), as such, the suit is within the time and both the lower Courts are justified in holding that the R.S.A.No.1022/2012 : 25 : suit claim of the plaintiff - company is not barred by time. Accordingly, I answer this substantial question of law.
In view of the answers given to both the substantial questions of law in favour of the plaintiff, the judgment and decree passed by the First Appellate Court in its order of review petition dated 09.04.2012 does not warrant any interference at the hands of this Court. Accordingly, I proceed to pass the following;
ORDER
(i) The appeal is dismissed.
(ii) The judgment and decree dated 31.01.2012 passed by the Court of the Additional District Judge at Shimoga in RA No.56/2008 and its subsequent order dated 09.04.2012 passed on the review application modifying the terms of the decree passed by the trial Court, is confirmed.
R.S.A.No.1022/2012: 26 :
(iii) The interim stay of the judgment and decree in RA No.56/2008 dated 31.01.2012 on the file of the Additional District Judge, Shimoga passed by this Court by its order dated 13.09.2012 is vacated. The amount of `1,33,000/-
deposited by the appellant herein under the said interim order and withdrawn, if any, by the plaintiff is to be appropriated towards the outstanding liability of the appellant herein towards the respondent herein, as per the modified decree vide order dated 09.04.2012 passed by the Additional District Judge, Shimoga in RA No.56/2008.
Registry to send a copy of this judgment to the Court below with lower Court records.
Sd/-
JUDGE GH