Delhi District Court
Rajender Seth vs Smt. Usha Narula W/O Late G.L.Narula on 9 February, 2011
1
IN THE COURT OF SHRI SURINDER S. RATHI:ADJ:ROOM NO.32:TIS
HAZARI COURTS :DELHI
CS NO:4/09/06
ID NO: 02401C1191902006
RAJENDER SETH
S/o Late Shri M.L.Seth
R/o D60, Kamla Nagar
3rd floor, Delhi7. .........Plaintiff
Vs.
1. Smt. Usha Narula w/o Late G.L.Narula
2. Sh. Tarun Narula s/o Late G.L.Narula
3. Smt. Sikha Narula W/o Sh. Tarun Narula (dropped)
All R/o House No.E123, Kamla Nagar,
New Delhi
SUIT FOR RECOVERY OF RS.18,60,000/
ALONGWITH PENDENTILITE AND FUTURE INSTERET
DATE OF INSTITUTION : 22.12.2006
DATE OF FINAL HEARING : 09.02.2011
DATE OF JUDGMENT : 09.02.2011
JUDGMENT
1. This suit has been filed by plaintiff against the defendants seeking decree @contd.
2for recovery of Rs.18,60,000/ with pendetilite and future interest @36% per annum.
2. Short pleaded case of the plaintiff is that he is engaged in the business of Flowers decorations and Catering business in the name and style of M/s Seth Decorators and Late Sh.G.L.Narula, was the leading decorators of Kamla Nagar area and was doing his business under the name and style of M/s Narula Tent House. As per plaintiff , he alongwith Late Sh.G.L.Narula performed several marriage and other functions jointly and Sh. G.L.Narula used to collect charges from the parties and he used to give part payments to the plaintiff and used to maintain running account qua him.
3. In October'2003 Late Sh. Narula wanted to expand his business and requested plaintiff for a friendly loan of Rs. 5 lacs with interest @36% per annum. Amount was to be repaid up to 31.12.2003. This payment was made by plaintiff after arranging from relatives and friends. In order to @contd.
3repay the part of this friendly loan, late Sh. Narula issued two cheques to him However, they were not presented for encashment on the request of Sh. Narula. Later on as Sh. Narula suffered the loss , he requested plaintiff for further additional loan of Rs.2.50 lacs, 3.50 lacs and Rs. 3 lacs respectively. Sh. Narula assured that this would be cleared by 31.12.2004.
4. It was confirmed by Late Sh. Narula and plaintiff obtained cheques qua security of this amount. However, out of the total admitted amount of Rs.19.50 lacs only Rs.2.50 lacs was paid up to 31.12.2004 and time was sought for repayment of remaining payment up to April'2005. Late Sh. Narula executed a receipt on 9.5.05 assuring repayment up to 31.1.2006 with interest. On 31.12006 Sh. Narula paid only Rs.2 lacs and assured to repay the balance by 28.2.2006. On 13.3.2006, he executed a document for repayment of Rs.15 lacs in six monthly installment of Rs.2.5 lacs each which shall be through cheque of Rs.50,000/ and cash of Rs.2 lacs a @contd.
4month. Six cheques were accordingly issued as detailed in para 13 of the plaint. Thereafter on 27.8.06, Sh. Narula died. Since the defendants no.2 succeeded Sh. Narula, as per plaintiff they are liable to honour the liability of late Sh. Narula. Although they admitted to repay the plaintiff but finally on 15.12.2006, they refused to make the payment. Plaintiff issued a legal demand notice on 16.12.2006 which was neither replied nor complied. In this backdrop , suit in hand was filed
5. Upon service of summons it was contested by defendants by filing a joint written statement. Dismissal of the suit was prayed on the plea that plaintiff forged documents. Objection qua misjoinder and non joinder of parties were also taken. On merits defendants conceded that Late Sh. Narula was in the said business. As per them plaintiff was running a petty Chaat Shop and he used to put his Chaat Stall at the functions where Late Sh. Narula used to have his tents. As per them plaintiff used to take @contd.
5financial help from late Sh. Narula and there was no occasion for Sh. Narula to seek financial assistance from him. They denied that Sh. Narula took a loan of Rs.5 lacs from plaintiff and it is claimed to be concocted story. Issuance of claimed cheque by late Sh. Narula to the plaintiff is also denied. It is claimed that plaintiff has obtained these cheques either fraudulently or by threatening Sh. Narula. It is also pleaded that signature of late Sh. Narula on those cheques are forged and fabricated, in so far as Sh.Narula never owed any money to the plaintiff and there was no occasion for him to issue cheques as claimed by plaintiff .
6. Defendant denied that Sh. Narula ever suffered any loss as mentioned in plaint. Plaintiff's plea of disbursal of Rs.2.5lacs, 3.5 lacs and 3.0 lacs loan to Sh.Narula is also denied. They also denied that late Sh. Narula made any payment to the plaintiff as claimed. The claimed receipts purportedly executed by late Sh. Narula on 9.9.05 and 13.3.2006 are forged and @contd.
6fabricated by the plaintiff to extract illegal money from the defendant. Issuance of six cheques of Rs.50,000/ each is also denied. Receipt of legal notice dated 16.12.2006 is accepted and it was replied on 22.12.2006.
7. Replication was filed by plaintiff wherein plaintiff reiterated his claim and denied the averments of the defendants made through WS. Receipt of reply of legal notice is accepted. Plaintiff conceded that he used to erect chaat stalls and other miscellaneous eatables in marriage functions.
8. Upon completion of pleadings following issues were identified by Ld. Predecessor on 25.5.07.
ISSUES
9.
1.Whether the suit is bad for nonjoinder a mis joinder of necessary parties as alleged in the preliminary objection no.2 of the written statement? (OPD)
2.Whether the present suit is based on forged and @contd.
7fabricated documents,if so, its effect? (OPD)
3.Whether the plaintiff is entitled to the suit amount as claimed in the plaint? (OPP)
4.Whether the plaintiff is entitled to the interest, if so, at what rate and for what period? (OPP)
5.Relief
10.In support of its case, plaintiff examined himself as PW1 apart from examining Sh. J.P.Sharma as PW2 and Sh. Narender Aggarwal as PW3.
11.On the other side defendants in support of their case examined defendant n.o.1 and defendant no.2 examined himself as DW2.
12.I have heard argument Ld. Counsel Sh. R.P.S.Sirohi for plaintiff and Sh.H.S.Uppal advocate for defendant . I have also gone through the judicial file.
13.In his deposition as PW1 vide affidavit Ex.P1, plaintiff deposed on the lines of his plaint . He has proved 8 cheques as Ex.PW1/1 to Ex.PW1/8, the receipt dated 9.5.05 & 13.3.06 as Ex.PW1/9 & 10, copy of legal notice @contd.
8dated 16.12.2006 as Ex.PW1/11, copy of receipts as Ex.PW1/12 to 14, UPC as Ex.PW1/15 and reply as Ex.PW1/16.
14.In his detailed cross examination , he stated that he was associated with M/s Narula Tent House since 2003. He had no separate office and was working from his office. He has not filed any letter head on record to show that he is working as flower decorator or caterers. He is not assessed with income tax or sale tax and has no bill or invoice for his business. He knew Late Sh. Narula since 1990 and used to work from his office.
15.He conceded that Sh. Narula even helped him in getting job/ business and Sh. Narula was not keeping good health since 2002. He used to keep his goods in the shop of late Sh. Narula. He conceded that his firm M/s Seth Decorators is not registered with Registrar of Firm. He claimed to be income tax assessee since 2000. He conceded that the loan amounts said to have been advanced to late Sh. Narula on four occasions were not @contd.
9reflected in his income tax return. He shows his income at only Rs.1.3 lacs to Rs.1.4 lacs per annum. He claimed that Rs.5 lacs was paid to Sh. Narula in somewhere in 2002 - 2003 and he has no document to substantiate this plea. He arranged this money from his friend namely Sh. J.P.Sharma, Sh. Narender Aggarwal and Sh. Ramesh Chadha. However, he was unaware about the break up of this amount as to who contributed how much.
16.He accepted that there was no witness when this payment was made and there is no receipt qua the alleged disbursement . Other than late Sh. Narula he has never extended any loan to any other person. He was unable to reply as to whether the first two cheques purportedly given by Sh. Narula were of the year 2002 or 2003. He was unable to reply as to who filled the cheques. He conceded that his names in cheques Ex.PW1/1 and 2 were not filled by Sh. Narula. He could not disclose the time when @contd.
10he made three other payments to Late Sh. Narula. As per him the interest which he was receiving from Sh. Narula was distributed by him between his friends and himself. He conceded that the hand writing appearing in letter hand Ex.PW1/9 and 10 are not that of Sh. Narula. As per him M/s Narula Tent House was a proprietorship concern and cheques were issued to him in the name of the firm. He conceded that other than cheques and notes, he has no document to show that he ever extended any loan to Sh. Narula. He conceded that Sh. Narula was not keeping well in 20022003 and had to be admitted in hospital several times. He conceded that in all the 8 cheques Ex.PW1/1 to 8, the name of drawee is not in the handwriting of Sh.Narula.
17.In his deposition as PW2 , vide affiavit Ex.P2, Sh. Jai Parkash Sharma supported the case of the plaintiff by deposing that Late Sh. Narula demanded loan of Rs.5 lacs from him in his presence and he contributed @contd.
11Rs.85,000/ to the plaintiff. He claimed to be witness to the remission of four cash loan advances purportedly made by the plaintiff to Sh. Narula. He claimed to be writer of text on receipt dated 15.1.2006 purportedly signed by Late Sh. Narula. ( By deposing this , the witness is improving upon the plaintiff's case in so far as it is not the pleaded case of the plaintiff that Sh. Jai Parkash Sharma was a witness to the said incident. The only role attributed to him in the plaint is that plaintiff raised some unspecified amount from him while he extended the claimed loan to late Sh. Narula.)
18.In his cross examination he stated that Sh. Narula used to treat plaintiff as his son and he allowed him to use his shop. He accepted that even though he used to visit Sh. Narula's shop but he never demanded any money from him. He claimed that Sh. Narula used to demand money from plaintiff and once the demand was made on 9.5.05 and other in the year 2006. As @contd.
12per him the first demand of Rs.5 lacs was made by late Sh. Narula in presence of three persons on 9.5.05. On the same day itself an agreement qua the loan was made. He got back his contribution of Rs.85,000/ within out of figure of Rs. 5 lacs within three months. As per him this 85,000/ was paid to him by plaintiff at the same time when plaintiff paid Rs.5 lacs to Sh.Narula. Witness further stated that plaintiff arranged Rs.5 lacs by selling his house in Malka Ganj and a shop in Kamla Nagar. As per him Late Sh. Narula returned Rs.5 lacs to the plaintiff . Contrary to his affidavit in chief, witness stated that he is not aware of any other payment made by plaintiff to Sh. Narula. He claims to be witness of handing over of cheques by Sh. Narula to the plaintiff . As per him name of the plaintiff may have been filled by Sh. Narula in the cheques.
19.PW3 is Narinder Aggarwal, he supported the case of the plaintiff vide affidavit Ex.P3. He claimed to be witness of remission of Rs.3.0 lacs,2.5 @contd.
13lacs and 3.5 lacs. He also claims to be witness of preparation of loan of Rs.15 lacs. Although as per plaintiff he took money from this witness as well but witness has not stated so in the affidavit in chief. As per him plaintiff is out of business for the last 5 years. In 20022003 plaintiff was financially sound , he used to extend friendly loans to assist people. Plaintiff used to take financial help from him as and when required. He stated that since 2005 M/s Narula Tent House had no business. He stated that he is not witness to the claim payment of Rs.5 lacs. He is a property dealer by profession.
20.Payments of Rs.3.5 lacs, 3.0 lacs and 2.5 lacs made by plaintiff within the gap of 15 days in his presence without any receipt where only he and plaintiff were present. He was also present when late Sh. Narula demanded the money. As per him plaintiff used to extend friendly loan with and without interest. Even though Sh. Narula demanded Rs.1520 @contd.
14lacs loan from plaintiff but plaintiff paid only Rs.9 lacs . As per him Sh. Narula did not return the previous loan of Rs.5 lacs. Execution of receipt of 2006 is Ex.PW1/10 was witnessed by him and PW2 as well and there was no other person but he did not sign the same. He claimed to have witness Sh. Narula signing the cheque. He accepted that cheques were blank. He accepted that Sh. Narula used to treat plaintiff as his son. He denied that plaintiff clandestinely removed the letter head and cheque of Late Sh. Narula for filing the suit.
21.DW1 Smt. Usha Narula defendant no.1. Vide her affidavit Ex.DW1/A she narrated on the lines of WS and proved the original medical record as Ex.DW1/1, dissolution deed as Ex.DW1/2.
22.In her cross examination she stated that partnership firm M/s Narula Tent House continued up to 2003 before it was dissolved vide a dissolution deed. Partners were late Sh. G.L.Narula and Sh.Surinder Narula. She did @contd.
15not deny that copy of the dissolution deed Mark A filed by her on record is the same document through which the firm was dissolved. She is a witness to this deed. She denied having knowledge of division of assets of the firm amongst the partners. Late Sh. Narula had half share in property No. E123, Kamla Nagar, Delhi which is now inherited by her and her son. Sh. Narula died intestate . She denied having personal knowledge about any transaction between plaintiff and her late husband. She is unaware as to who was operating the bank accounts of M/s Narula Tent House. The cheque books were not kept at their residence. She denied that Late Sh.Narula was sole proprietor of the firm or that the account of the firm was operated even beyond 2003. She denied signature of her husband on Ex.PW1/1 to Ex.PW1/10. She denied that her husband took any loan from the plaintiff .
23.DW2 Sh. Tarun Narula is defendant no.2. He deposed on the lines of @contd.
16WS vide affidavit Ex.DW2/1.
24.In his cross examination he stated that he knows plaintiff for last 78 years. Plaintiff is doing chaat business . Narula Tent House used to take plaintiff's services at times. He denied that his father took any loan from plaintiff.
25.Now I shall dispose of individual issues 1
26.ISSUE NO.
1.Whether the suit is bad for nonjoinder a misjoinder of necessary parties as alleged in the preliminary objection no.2 of the written statement? (OPD)
27.As far as objection of misjoinder is concerned, it was taken because of daughter in law of defendant no.1 Smt. Sikha Narula was impleaded as party in this suit even though she was not successor in interest of legal heir of late Sh. G.L.Narula. This anomaly was set right by the order of Ld. Predecessor dated 18.8.2008.
@contd.
17
28.As regard the plea of non joinder, it was submitted before this court that since the cheques relied by the plaintiff in the suit are that of M/s Narula Tent House, other two partners should have been impleaded as co defendants. Admittedly this firm was dissolved vide lease dated 31.3.2002 Mark A (photocopy). It was placed on record by the defendant and accepted by the plaintiff. The very first page of the deed shows that it was between mother of late Sh. G.L.Narula and brother Sh. Surender Pal Narula. This partnership started on 1.4.1992 came to an end on 31.3.2002 when Smt. Jaswant Rani and Sh. Surender Pal Narula resigned from it and assigned all rights, title interest etc in favour of late Sh. G.L.NARULA. Once it is so agreed between the partners and the defendant , there was no occasion for the plaintiff to sue the remaining partners.
29.At this juncture LD. Counsel for defendant submits the plea of non objection also percolates to non impleadment of remaining LRs of Late Sh.
@contd.
18Narula namely Smt. Aarti Dhingra. This plea has not been taken either in the WS during trial by the defendants , rather during the trial it was the case of the defendants that Late Sh. Narula died intestate. After his death, Smt. Aarti executed the relinquishment deed in the favour of defendants and as such now the impleaded defendants are sole successor in interest of estate of late Sh. Narula. For the foregoing reasons, I find no force in the objection and same is accordingly decided in favour of plaintiff and against defendants .
ISSUE NO.2 , 3 & 4
30.
2.Whether the present suit is based on forged and fabricated documents,if so, its effect? (OPD)
3.Whether the plaintiff is entitled to the suit amount as claimed in the plaint? (OPP)
4.Whether the plaintiff is entitled to the interest, if so, at what rate and for what period? (OPP)
31.At the onset before dealing with the merits of this case, it is observed that plaintiff had relied on two purported acknowledgments Ex.PW1/9 and 10 @contd.
19dated 9.5.05 and 13.3.06 respectively. These acknowledgment also contain a promise to pay. As such Article 49 of Schedule 1 of Indian Stamp Act 1899 is attracted. As per Stamp Duty leviable in Delhi, the above two documents were supposed to be affixed stamp duty @ Rs.10 per one thousand rupees i.e. about Rs.15,000/ in this matter. Since no stamp was admittedly paid on these documents, by virtue of Section 35 of the Act neither of this document can be read or relied for any purpose whatsoever.
32.I find no strength in the argument of LD. Counsel for plaintiff that defendant ought to have taken specific objection in the WS. As far as inclusion of objection in the WS is concerned, Section 35 of Stamp Act does not make it pre requisite qua its invocation. As regards raising of objection at the stage of admissions of document in evidence , the observation made by the court reads ............... "documents are exhibited @contd.
20subject to legal objection that can be raised during the trial at any time ........." This, in my considered view is sufficient a compliance of requirement of Section 35 which provides that once an objection is taken, an unstamped document can not be admitted in evidence for any purpose. Ld. Predecessor kept the issue open and alive and as such since the objection remained undecided, it has to be dealt with at the stage of final argument.
33.In cases 2009 CCC 735 SC and AIR 2003 Delhi 120
. It was also
ruled that :
"a document which is compulsorily registrable and on which stamp duty is to be paid , it shall not be read in evidence by virtue of section 35 of Stamp Act ."
34. Hence plaintiff can not rely on document Ex.PW1/9 and 10.
35.As far as other merits of the case are concerned, it is conceded by LD. Counsel for plaintiff that no payment out of alleged 14 lacs, i,e, Rs.5 lacs, @contd.
212.5 lacs, 3.5 lacs and 3 lacs was made by a cheque or a draft. It is also admitted case of the plaintiff that no receipt qua these payments is available with him. Also admittedly plaintiff has nothing on record to show that he withdrew these amounts on different dates from any bank account so as to corroborate the claim of actual delivery of payment. Ld. Counsel for plaintiff also concedes that the plaintiff is totally silent as far as the specific date on which the alleged payment of Rs.5 lacs was made to Late Sh. Narula. However, there is mention of October'2003. It is also conceded that the plaint as well as the entire file is silent, qua specific dates on which the claimed remaining payments were advanced to late Sh. Narula. Plaintiff also concedes that he has not placed or proved on record any personal account sheet or any other document through which he can show that what payments were made by him to Sh. Narula on what date and when Sh. Narula made part payments back. Plaintiff also concedes @contd.
22that even though he was an income tax assessee since 2000 but neither of his return till date has any reference of any remission of any loan amount to Sh. Narula.
36.As such in the absence of any of the above documentary corroborative evidence, the only evidence brought by the plaintiff on record is eight cheques Ex.PW1/1 to Ex.PW1/8 purportedly drawn by late Sh. Narula in favour of plaintiff . Close scrutiny of first two cheques Ex.PW1/1 and 2 dated 24.12.2003 and 27.12.2003 for Rs.1 lac each shows that they are per se forged. Even though no Handwriting Expert was examined by either of the parties it is settled legal proposition that Court can itself evaluate and compare the document.
37.The signature appearing in the column means for drawer, no where even remotely coinside with signature appearing on remaining cheques. Even the dates column of this cheques have been apparently tempered with @contd.
23whereby date of 4.1.2003 was converted to 24.12.2003 and 7.1.2003 was converted to 27.12.2003. The sheer fact that even though these two cheques were available with the plaintiff but still he did not present the same for encashment within six months of date of drawing. It also shows that plaintiff was never sure about their encashment since the signature appearing therein would not have definitely been tallied with specimen signature of late Sh. Narula available with his M/s Dena Bank. There could have been a fear of criminal prosecution as well.
38.Since this suit is solely based on cheques purportedly issued by Sh. Nirula , the only legal fall out thereof is drawing of presumption under Section 118 of the NI Act qua liability. It is settled legal proposition that presumption of legal liability U/s 118 NI Act is not an absolute one but is rather a rebuttal one. In case titled M.S. NRAYANAN MENON @MANI vs. STATE OF KERALA 2006 (3) RCR CRIMINAL 504 Hon'ble Supreme @contd.
24Court while discussing implication of Section 118 of NI Act observed that :
" Court shall presume the negotiable instrument to be considered unless and until after considering the matter before it, it either believe that the consideration does not exist or considers the nonexistence of the consideration so probable that a prudent man ought , under the circumstances of the particular case , to act upon the position that the consideration does not exist. For rebutting such a presumption , what is needed is to raise the probable defence.......... it is not necessary for the defendant to disprove the existence of consideration by way of direct evidence. The evidence adduced on behalf of the complainant can also be relied upon. The standard of proof evidently is preponderance of probability. "
39.Coming to the first two cheques Ex.PW1/1 and 2, it is evident that the uncorrected/ untempered dates were 4.1.2003 and 7.1.2003. If plaintiff is to be believed that first installment of Rs.1 lac was given to Late Sh. Narula in October'2003, then why would Late Sh. Narula draw cheques worth Rs.2.5 lacs in favour of plaintiff in January'2003. This coupled with above discussion categorically shows that these two cheques are per se forged @contd.
25and fabricated documents and no reliance can be placed upon them.
40.As regard the remaining six cheques of Rs.50,000/ each between dated 25.406 and 25.9.06 , it has not only been pleaded by the plaintiff in the plaint but is also mentioned by him in his affidavit in chief on page 2 last line that "the balance was confirmed by Sh.G.L.Narula and cheques were kept towards security and repayment will be made in cash." If this plea of plaintiff is believed than as per settled legal proposition a cheque drawn as security does not come under the definition of term Negotiable Instrument as per Section 6 and Section 13 of the NI Act. If this is so then no presumption U/S 118 NI Act is available to the plaintiff qua these admitted security cheques.
41.As mentioned in the above judgment, Hon'ble Supreme Court has stressed that the existence of the legal consideration qua a cheque has to be judged by the Court according to circumstances available in each @contd.
26particular case.
42.In the case in hand , as concluded, supra, there is absolutely no evidence of remission of any amount by plaintiff to late Sh. Narula at any point of time. The circumstances referred to by the plaintiff in the plaint and during the trial in which Late Sh. Narula sought friendly loan from him @36% per annum is also shrouded with mixture of improbability and falsehood.
43.The inconsistencies in the statement of plaintiff and his two witnesses are such that they go to the root of the matter and vitiate the entire story cooked up by the plaintiff in the suit in hand. Three witnesses maintain that the business of Narula Tent House up to 200304 was flourishing. If this is so then why would late Sh. Narula seek loan of RS.14 lacs from a man who is totally dependent upon him and who earn his livelihood by erecting chaat stall and decorating flowers that too from the office of late Sh. Narula. Plaintiff is a man who was relied by Late Sh. Narula as a son, @contd.
27who was given business by Late Sh. Narula. Even though plaintiff had no place or abode for doing business , late Sh. Narula allowed him to use his office. Plaintiff did not even have a bill book of his own. As per is admission , he was hardly earning Rs.1.25 lacs per year which comes to around Rs.10,000/ per month, it is not only improbable but is rather impossible for a man having this kind of meager income paying Rs.14 lacs as loan to a man who is his mentor and who is having flourishing tent business. It is impossible that plaintiff paid Rs.9 lacs cash to Sh. Narula within span of 15 days. There are also inconsistencies qua the time when the loan was purportedly demanded or paid. As per plaintiff it was in October'2003 while as per PW 2 and 3 it was in 2005 & 2004 respectively. The sham ness and concoction of story coined by the plaintiff is evident from the fact that as per him he was alone when he paid Rs,5 lacs to Sh. Narula while as per PW2 Sh. Jai Parkash Sharma, he was also present @contd.
28with the plaintiff . As per PW2 it was actually he and plaintiff who were present when the payment was made. PW2 was oblivion of any other loan except Rs.5 lacs. PW3 is shown to have lent money to the plaintiff which he gave to late Sh. Narula but he denied the same in the evidence. The inconsistencies in the story does not stop here. As per plaintiff he had never advanced any loan to any person except lending Rs.14 lacs to late Sh. Narula. But as per PW2 plaintiff has been lending money to his friends without interest and to some other person with interest. This witness even mentioned the name of one person Sh. Ajay Kumar from whom plaintiff is said to have recovered his money by filing a suit.
44.On the one hand plaintiff claims that he had the money available with him apart from arranging some of it from his friends to pay Sh. Narula, but as per PW2 , plaintiff had to sell his house and shop to raise the loan for Sh. Narula. This input is beyond the plaint and beyond even probable human @contd.
29imagination that a man erecting chaat shop would sell his house and shop just to extend the loan , that too without any paper work and receipt.
45.Circumstances qua issuance of six cheques in question are also shrouded with suspicion in so far as, as per plaintiff Sh. Narula signed them in his presence and while conceding that its body was not filled by Sh.Narula. As per PW2 plaintiff 's name was entered by Sh. Narula himself while PW3 conceded that the cheques were blank. A plain look upon these cheques show that they contain handwritings of a minimum of three persons. The date and amount , the name of the drawee are apparently of three different persons. The drawees name in all the six cheques are in same handwriting which is different from the remaining text.
46.Further more as per plaintiff all these six cheques were issued to him by Sh. Narula in one go but serial number of these cheques show that there is a gap of seven cheque between cheque no.742980 and 742988 i.e. @contd.
30between cheque no.4 and 5. There is no explanation to this gap of seven cheques drawn in one go out of the same cheque book. All these circumstances invariably point towards the falsity of the story cooked by the plaintiff . The sheer fact that plaintiff did not present either of these cheques for encashment also shows that there was something seriously wrong in the way he procured the cheque leafs . Had there been any iota of truth in these cheques and the story casted around them, plaintiff would have definitely presented them for encashment.
47.For the foregoing reasons I have no hesitation in concluding that plaintiff has miserably failed to prove his case to seek the decree of Rs.18,60 lacs with interest @36% per annum. These issues are decided against the plaintiff and in favour of defendant .
48.Further more before parting with this judgment I would like to raise a serious issue of fiscal and monetary impropriety prevalent in our society.
@contd.
31This is about the mammoth of a problem i.e. parallel economy of Black Money. In Numerous cases, like the one in hand, this court has found that people thronging the Courts with concocted stories of exchange of lakhs & lakhs of rupees in cash (read. Black Money).
49.As per Section 10 & 23 of Contract Act, any agreement between two parties which is violation of any law of land, is not enforceable in law and can not qualify to be a legally enforceable contract.
runs as under:
50.Section 10 & 23 of the Contract Act Section 10 of The Indian Contract Act 1872: What agreements are contracts All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Nothing herein contained shall affect any law i force in {India}, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.
Section 23 of The Indian Contract Act,1872
51. @contd.
32What consideration and objects are lawful and what not, The consideration or object of an agreement is lawful unless it is forbidden bylaw or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
52.Section 40 A (3) of Income Tax Act, 1961 void with Rule 6 DD of Income Tax Rules , 1962 prohibits giving of cash more than Rs.20,000/ . Section 40 A (3) of Income Tax Act, 1961 runs as under : Expenses or payments not deductible in certain circumstances: (1)The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head "Profits and gains of business or profession.".............. (3) Where the assessee incurs any expenditure in respect of which a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn a bank or account payee bank draft, exceeds twenty thousand rupees, no deduction shall be allowed in respect of such expenditure.
@contd.
33Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under subsection (3) and this subsection where a payment or aggregate of payments made to a person in a day, otherwise than by an account payee cheque drawn on a bank or account payee bank draft, exceeds twenty thousand rupees, in such cases and under such circumstances as may be prescribed, having regard to the nature and extent of banking facilities available, considerations of business expediency and other relevant factors.
53. Section 6 DD of Income Tax rules 1962 runs as under: Cases and circumstances in which payment in a sum exceeding (twenty thousand) rupees may be made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft. No disallowance under the subsection (3) of section 40A shall be made where any payment in a sum exceeding (twenty thousand) rupees is made otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft............ Primarily above statutory provisions are Anti Tax evasion measures in so far as they require that payment shall be made on account payee instrument so that genuineness of the transaction can be verified and risk of tax evasion can be mitigated. But violation of these statutory provisions also give rise to birth of Black Money. Lately @contd.
34Hon'ble Supreme Court has come down heavily on Black Money issue and directions are being in a PIL on the subject.
The Legal definition of term Black Money reads "Proceeds usually receive in cash from under ground economic activities like drug trafficking , weapon trading, terrorism, prostitution , selling of counter feet and stolen goods etc. It is generated through illegal activities and as such is not taxed. Receipiant of black money tend to hide it and spend it only in the underground economy in the attempt to give it appearance of the legitimate money.
54.Despite this people who are not even Income Tax payee or even assessee, come with suits claiming cash transaction worth lakhs of rupees and unknowingly we at judiciary ends up ratifying their claims of apparent Black Money .
Atar Singh Gurmukh Singh Vs. ITO Ludhiana" AIR 1991
55. In case titled "
SC 2109 while expressing its opinion on the menace of black money and its ill effect Hon'ble Supreme Court observed , " It will be clear from the provisions of Section 40A (3) and Rule 6DD that they are intended to regulate @contd.35
the business transactions and to prevent the use of unaccounted money or reduce the chances to use blackmoney for business transactions. If the payment is made by a crossed cheque drawn on a bank or a , crossed bank draft then it will be easier to ascertain, when deduction is claimed, whether the payment was genuine and whether it was out of the income from disclosed sources. In interpreting a taxing statute the Court cannot be oblivious of the proliferation of black money which is under circulation in our country. Any restraint intended to curb the chances and opportunities to use or create blackmoney should not be ' regarded as curtailing the freedom of trade or business."
56. In case titled " R. K. Garg v. Union of India," 1981 A.I.R. (SC) 2138 Hon'ble Supreme Court expressed its anguish over parallel black money economy in following words , "The abundance of black money has in fact given rise to a parallel economy operating simultaneously and competing with the official economy. This parallel economy has over the years grown in size and dimension and even on a conservative estimate, the amount of black money in circulation runs into some thousand crores. The menace of black money has now @contd.
36reached such staggering proportions that it is causing havoc to the economy of the country and poses a serious challenge to the fulfilment of our objectives of distributive justice and setting up of an egalitarian society. There are several causes responsible for the generation of black money and they have been analysed in the Report of the Wanchoo Committee. Some of the principal causes may be summarised as follows : (1) high rates of taxation under the direct tax laws : they breed tax evasion and generate black money; (2) economy of shortages and consequent controls and licenses leading to corruption for issuing licences and permits and turning blind eye to the violation of controls; (3) donations of black money encouraged by political parties to meet election expenses and for augmenting party funds and also for personal purposes; (4) Corrupt business practices such as payments of secret commission, bribes, on money, pugree etc. which need keeping on hand money in black; (5) ineffective administration and enforcement of tax laws by the authorities and (6) deterioration in moral standards so that tax evasion is no longer regarded as immoral and unethical and does not carry any social stigma. These causes need to be eliminated if we want to eradicate the evil of black money. But whether any steps are taken or not for removing these causes with a view to preventing, future generation of black money, the fact remains that today there is considerable amount of black money, @contd.
37unaccounted and concealed, in the hands of a few persons and it is causing incalculable damage to the economy of the country........
The first casualty of this evil of black money is the revenue because it loses the tax which should otherwise have come to the exchequer. The generation of black money through tax evasion throws a greater burden on the honest tax payer and leads to economic inequality and concentration of wealth in the hands of unscrupulous few in the country. In addition, since black money is in a way 'cheap' money because it has not suffered reduction by way of taxation, there is a natural tendency among those who possess it to use it for lavish expenditure and conspicuous consumption. The existence of black money is to a large extent responsible for inflationary pressures, shortages, rise in prices and economically unhealthy speculation in commodities. It also leads to leakage of foreign exchange, making our balance of payments rather distorted and unreal and tends to defeat the economic policies of the Government by making their implementation ineffective, particularly in the field of credit and investment. Moreover, since black money has necessarily to be suppressed in order to escaped detection it results in immobilisation of investible funds which would otherwise be available to further the economic growth of the nation and in turn, foster the welfare of the common man. It is therefore no exaggeration to say that black money is a cancerous @contd.
38growth in the country's economy which if not checked in time is certain to lead to chaos and ruination. There can be no doubt that urgent measures are therefore required to be adopted for preventing further generation of black money as also for unearthing existing black money so that it can be canalised for productive purposes with a view to effective economic and social planning."
57. While touching this issue of black money Halsbury's Laws of England, 3rd Edition, Vol. 8 at p. 125, explain it in the following words:
"If the illegality of a transaction is brought to the notice of the Court, whether the contract ex facie shows illegality, or it appears in the course of the proceedings, and the person invoking the aid of the Court is himself implicated in the illegality, the court will not assist him, even if the defendant has not pleaded the illegality and does not wish to raise that objection."
58. In case titled " Nagle Vs. Feilden,(1966) 2 QB 633" it was observed, " On the application of these principles, it has been universally recognised that a contract to defraud the revenues or that tends to promote corruption in public life or which tends to prejudice social and economic interest of the community would be void and unenforceable as being opposed to public policy. The general principle has been exemplified and extended @contd.
39to contracts which may be exfacie lawful but which were intended to be exploited for an illegal purpose."
59. In case titled , "Alexander v. Rayson, (1936) 1 KB 169" it was held that a contract which may be exfacie lawful but which were intended to be exploited for an illegal purpose would be void and unenforceable being opposed to Public Policy.
60. Halsbury's Laws of England, 3rd Edn., Vol. 8, Para. 258 at. p. 150 explain it in the following words :
"The Courts in England have refused to grant relief based on such contracts on the principle of ex dolo malo non oritur action, that is, no Court will lend its support to a man who founds his cause of action upon an immoral or an illegal act. It has, however, been recognisced in England that if the illegal consideration constituted a subsidiary or a minor part of the total consideration and if the illegality did not involve a criminal act or one contra bonos mores, the illegal part of the consideration may be severed from the rest of the consideration and the legal promises may be enforced and in such cases, the principle of severability has been applied. It has @contd.40
also been recognised that in case a claimant has relented and withdrawn from the contract before the illegal purpose has been substantially performed, money paid or goods delivered pursuant to such a contract could be recovered from the other party."
61. In case titled, "Gherulal Parakh Vs. Mahadeo Das, AIR 1959 SC 781" it has recognised in India that Section 23 was inspired by the Common Law of England and should be construed in that light. It was held that:
"It is therefore, beyond controversy that where the consideration or the object of an agreement is opposed to public policy, such an agreement would be void and could not be enforced in any Court law. As regards the concept of public policy the cautious approach of Courts England that new heads of public policy should not be propounded has been adopted in India and it has been pointed that the Courts should ordinarily "expound" and not "expand" the frontiers of public policy."
62. In case titled "Kedar Nath Motani v. Prahlad Rai (1960) 1 SCR 861" the maxim ex dolo malo non oritur actio has also been applied to India and it has been further observed:
@contd.41
" The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the plaintiff is not required to rest his case upon that illegality, then public policy demands that the defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the plaintiff's conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuse or by misstating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant should not prevail."
63.In case titled M/s Anand Prakash Om Parkash Vs. M/s Oswal Trading Agency AIR 1976, Delhi, 24 Hon'ble Delhi High Court dealt with Civil Suit wherein in a transaction of sale/purchase of goods through unaccounted money i.e. Black Money was ////// @contd.
42Hon'ble High Court painstakingly assessed the legal position in the light of prevailing statutory provisions and precedents in English Law while discussing Section 10 and 23 o the Contract Act at length made valuable observations qua necessity of curbing the usage of black money and highlighted cautions which are supposed to be taken by judicial courts while dealing matters pertaining to Black Money Hon'ble Court observed that :
"In England an agreement which tends to be injurious to the public or against public good is void at Common Law as being contrary to public policy. Even though it is a country wedded to contractual freedom, it is recognised that any contract that tends to prejudice any social or economic interest of the country must be forbidden.
What contracts would be contrary to public policy has been subjectmatter of considerable controversy. At one time it was thought that the rules already established in @contd.43
that behalf by precedent may be moulded to fit the new conditions of a changing world, yet it was no longer legitimate for the courts to invent a new head of public policy. In course of time, however, this concept underwent considerable change and it was recognised that the determination of what was contrary to public policy must necessarily vary from time to time and it was pointed out that the rules remain but "its application varies with the principles which for the time guide public opinion".Recent thinking on this branch of the law favours a more dynamic approach and it is suggested that "the law relating to public policy cannot remain immutable. It must change with the passage of time. The wind of change blows upon it."
64.However, that suit was not allowed to fail because primarily the facts indicated that consideration between the parties was to do trading business.
@contd.
44
65. But in the case in hand, there was no other transactions except the claimed lending of Black Money. The sale consideration was the black money and the relief sought is also recovery of black money, unlike the Anand Prakash Case wherein the actual transaction was sale and purchase of goods. As such in my considered view the claim of the plaintiff of delivery of Rs. 19.50 lacs as a friendly loan is squarely hit by Section 23 of Indian Contract Act. As the consideration and object of the Agreement was unlawful and as such it is hit by Section 10 of the Contract Act and is not enforcible.
66.The absence of desired and required attention, from the side of judiciary has led to de facto recognition of the Black Money's parallel economy. Black Money is eating into vitals of our fragile economy. On the one hand it escalates inflation and on the other it impedes our country's growth rate. It also widens the Rich Poor divide which is leading to social unrest in @contd.
45larger part of our country.
67.This is high time that we shall reconsider entertainment of suits with stories of payments of huge cash Black Money in violation of above Statutory Provisions. It will go a long way in making Black Money a redundant assets compelling the law violators to declare it & pay the country its due by way of taxes. Mere issuance of a Negotiable Instrument like cheque or a pronote in lieu of cash Black Money transaction can not be considered to be a ratification of black money deal. Unless requisite sum of money is declared as a lawful income and due tax is paid over it , a chque, in its own wisdom, can not term Black Money into white money. Section 118 NI Act only aims at securing the sanctity of a Negotiable Instrument but this provision is being misused by Black Money hoarders it is a mistaken belief that it an turn Black Money into a legitimate fund.
@contd.
46
68.A small step on the part of judiciary in not recognizing the claim of cash transaction of undeclared money will go a long way in curbing this menace. RELIEF
69. In view of the above facts and circumstances of the case and decision on above mentioned issues, I have no hesitation in concluding that plaintiff failed miserably to prove his case. Suit of the plaintiff stands dismissed on merits with cost. Decree sheet be prepared accordingly and file be consigned to RR.
ANNOUNCED AND DICTATED IN OEPN COURT ON 9.2.2011 (SURINDER S. RATHI) ADJ07/CENTRAL:DELHI @contd.
47MONEY DECREE SECTION 34 OF THE CODE OF CIVIL PROCEDURE IN THE COURT OF SHRI SURINDER S. RATHI:ADJ:07CENTRAL:
ROOM NO.32:TIS HAZARI COURTS :DELHI CS NO:4/09/06 ID NO: 02401C1191902006 RAJENDER SETH S/o Late Shri M.L.Seth R/o D-60, Kamla Nagar 3rd floor, Delhi-7. .........Plaintiff Vs.
1. Smt. Usha Narula w/o Late G.L.Narula
2. Sh. Tarun Narula s/o Late G.L.Narula
3. Smt. Sikha Narula W/o Sh. Tarun Narula (dropped) All R/o House No.E-123, Kamla Nagar, New Delhi SUIT FOR RECOVERY OF RS.18,60,000/-
ALONGWITH PENDENTILITE AND FUTURE INSTERET DATE OF INSTITUTION : 22.12.2006 DATE OF FINAL HEARING : 09.02.2011 DATE OF JUDGMENT : 09.02.2011 This suit coming for final disposal before me in the presence of Ld. Counsel Sh. R.P.S.Sirohi for plaintiff and Sh.H.S.Uppal advocate for defendant It is ordered suit of the plaintiff stands dismissed on merits with cost. Parties are left to bear their own costs.
@contd.
48
Costs of the suits
Plaintiff Defendant
Stamp for plaint NIL Stamp for power NIL
Stamp for power NIL Stamp for exhibits NIL
Stamp for exhibits NIL Stamp for petition NIL
Pleader's fee NIL Pleader's fee NIL
Subsistence for witness NIL Subsistence for witness NIL
Commissioner's fee NIL Commissioner's fee NIL
Service of process NIL Miscellaneous NIL
Miscellaneous NIL
Total NIL Total NIL
Given under my hand and the seal of this court, Dated 9/2/2011.
SEAL ADDL. DISTRICT JUDGE
CENTRAL-07,DELHI
@contd.
49
CS NO:4/09/06
ID NO: 02401C1191902006
RAJENDER SETH
Vs.
Smt. Usha Narula w/o Late G.L.Narula
9.2.2011
Pr: LD. Counsel Sh. R.P.S.Sirohi advocate for plaintiff
LD. Counsel Sh. H.S.Uppal advocate for defendant FA heard at length from both the sides and file perused. Vide a separate judgment of the day suit of the plaintiff is dismissed on merits with cost. Decree sheet be prepared accordingly and file be consigned to RR.
(SURINDER S. RATHI) ADJ07/CENTRAL:DELHI 9.2.2011 @contd.