Kerala High Court
Dhanlaxmi Bank Ltd vs M/S.Ananth Oil Extractions Ltd on 20 August, 2025
Author: T.R. Ravi
Bench: T.R.Ravi
R.F.A. No.347 of 2005
2025:KER:62522
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE T.R.RAVI
WEDNESDAY, THE 20TH DAY OF AUGUST 2025 / 29TH SRAVANA, 1947
RFA NO. 347 OF 2005
AGAINST THE JUDGMENT DATED 30.11.2004 IN OS NO.163
OF 2003 OF PRINCIPAL SUB COURT, ERNAKULAM
APPELLANT/DEFENDANT:
THE DHANLAXMI BANK LTD.
INCORPORATED UNDER THE INDIAN COMPANIES ACT
HAVING ITS REG. OFFICE AT THRISSUR,
REP. BY THE SENIOR MANAGER,
THE DHANALAKSHMI BANK LTD.,
INDUSTRIAL FINANCE BRANCH,
XL/7296, M.G. ROAD,
KOCHI - 682 035.
BY ADVS.
SHRI.P.VIJAYARAGHAVAN
SHRI.K.M.BIJU
RESPONDENT/PLAINTIFF:
M/S.ANANTH OIL EXTRACTIONS LTD.,
A COMPANY INCORPORATED UNDER THE INDIAN
COMPANIES ACT, VASUDEVA BUILDING, T.D. ROAD,
COCHIN-11,
R.F.A. No.347 of 2005
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REP. BY ITS MANAGING DIRECTOR.
BY ADVS.
SMT.SHAHNA KARTHIKEYAN
SRI.M.P.SREEKRISHNAN
THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD
ON 10.04.2025, THE COURT ON 20.08.2025 DELIVERED THE
FOLLOWING:
R.F.A. No.347 of 2005
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"CR"
T.R. RAVI, J.
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R.F.A. No.347 of 2005
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Dated this the 20th day of August, 2025
JUDGMENT
The defendant in a suit for money is the appellant. The parties are referred to by their status in the suit.
2. The plaintiff is a Limited Company. M/s. Sree Ananth Refineries Ltd. is a sister concern of the plaintiff. The plaintiff had availed an open cash credit facility and a vehicle loan from the defendant Bank. M/s. Sree Ananth Refineries Ltd. had availed an open cash credit facility and a term loan from the defendant. There were defaults in the repayment of the loan accounts. The plaintiff owned 9.869 cents in Sy.No.2307, with a three-storeyed building in Ernakulam Village. An agreement was entered into between the plaintiff and the defendant on 31.1.2000, for the sale of the property to the defendant. The time fixed for completion of the sale was 6 months. The 1 st and 2nd floors of the building were in possession of the State Bank of R.F.A. No.347 of 2005 2025:KER:62522 -4- Travancore, who wanted time till the end of the year 2000 to vacate the building. The time for completion of the sale was extended to 31.12.2000, and the same was endorsed in the agreement. The sale consideration fixed was `220 lakhs. According to the plaintiff, `170 lakhs out of the said amount were agreed to be adjusted towards the liability of the plaintiff, and the balance `50 lakhs was agreed to be credited towards the liability of M/s.Sree Ananth Refineries Ltd. The sale deed executed on 28.12.2000 contains a recital to that effect.
3. The plaintiff availed a loan of `224 lakhs from the KFC. One of the conditions of the loan was that the liabilities of the defendant would be wiped off. According to the plaintiff, just before the registration of the sale deed, the defendant insisted that an additional sum of `5 lakhs should be paid to close the loan account of the plaintiff. M/s. Sree Ananth Refineries had mortgaged by deposit of title deed, an extent of 65.435 cents in Sy.No.136/4 in Maradu Village, as security for the loan granted to them, and the said property was also to be mortgaged with the KFC for a working capital loan of `150 lakhs to be granted R.F.A. No.347 of 2005 2025:KER:62522 -5- to M/s. Sree Ananth Refineries. The plaintiff's case is that the defendant had by coercion extracted an additional sum of `5 lakhs, since the plaintiff had to complete the sale by 31.12.2000, by which date the time granted by the Income Tax Department will end and the title deeds were also to be handed over to KFC towards security for the loan availed from them. It is also contended that the defendant had, against the stipulation in the sale deed, adjusted `175 lakhs towards the loan account of the plaintiff, and only `45 lakhs was credited towards the loan account of M/s.Sree Ananth Refineries Ltd. The suit was filed for recovery of `7,44,791/- with interest at the rate of 22.75% on `5 lakhs from the date of the suit till the date of realisation, with costs.
4. The defendant filed written statement contending that the suit is barred by limitation, that it is bad for non- joinder of necessary parties, that the proposal for sale of the building originated from the plaintiff, that the plaintiff did not disclose the pendency of a rent control petition, and that the plaintiff did not complete all the formalities for the sale, within R.F.A. No.347 of 2005 2025:KER:62522 -6- the stipulated 6 months. It is stated that the draft sale deed was approved by the Income Tax department and was forwarded to the defendant on 3.8.2000, but the sale got delayed by another 4 months. It is stated that there was no agreement by the defendant to wipe off the entire liabilities by accepting `170 lakhs. It is contended that as on 31.1.2000, the amounts outstanding from the plaintiff towards the open cash credit and vehicle loan account were `184.66 lakhs and `6.02 lakhs respectively, which increased to `188.10 lakhs and `6.25 lakhs by 31.7.2000. It is stated that as on 31.7.2000, the amounts outstanding from M/s Sree Ananth Refineries were `47.01 lakhs and `42.86 lakhs in the two loan accounts, respectively. It is further stated that the total amount due from the plaintiff as on 28.12.2000, the date of sale, was `209.89 lakhs, which was agreed to be closed at `175 lakhs, on repeated request of the plaintiff. The contention regarding coercion is denied. It is further stated that the loan account of M/s Sree Ananth Refineries was closed only in February 2001, on remitting `43,31,000/-, over and above the sum of `45 lakhs which was adjusted from the sale consideration of `220 lakhs. R.F.A. No.347 of 2005
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5. The following issues were framed for trial.
"1. Whether the defendant is not bound by the terms of the agreement dated 31.01.2000 and the endorsements made by both parties extending the time for execution of the sale deed?
2. Whether the defendant has not committed breach of contract by unilaterally adjusting `175/- lakhs out of the sale consideration towards the liability of plaintiff instead of `170 lakhs agreed to between the parties?
3. Whether in the facts and circumstances of the case the defendant who was creditor had not exercised unlawful coercion on the plaintiff to extort `5 lakhs more than the agreed amount of `170 lakhs towards liability?
4. Whether the plaintiff has committed breach of contract as alleged by the defendant in para.6 of the written statement?
5. Whether the plaintiff is not entitled to the amount claimed in the suit?
6. What order as to costs."
6. On the side of the plaintiff, Exts.A1 to A16 were marked, and PW1 was examined. DW1 was examined on the R.F.A. No.347 of 2005 2025:KER:62522 -8- side of the defendant. The trial court found that the defendant had committed breach of the contract by unilaterally adjusting `175 Lakhs out of the sale consideration towards the liability of the plaintiff instead of `170 Lakhs agreed to between the parties. The Court further found that the defendant was not entitled to retain the amount of `5 Lakhs, which had been paid under coercion. The Court found that a payment made under compulsion is also hit by Section 72 of the Indian Contract Act. All the issues were found in favour of the plaintiff, and the suit was decreed. The appeal is filed against the judgment and decree dated 31.11.2004.
7. The appellant contends that Ext.A1 agreement stipulates the sale of the property to be completed by 30.07.2000 and on payment of `220 Lakhs. The period was extended till 31.12.2000. Clause 2 of the agreement shows that time is the essence of the contract. It can be seen from the endorsement regarding the extension of time that it was at the request of the plaintiff. It is pointed out that Ext.A1 does not say that, by the appropriation of the sale consideration of R.F.A. No.347 of 2005 2025:KER:62522 -9- `220 Lakhs towards the liability of the plaintiff and the plaintiff's sister concern, the entire loan liability of the plaintiff and the sister concern would stand extinguished. It is further pointed out that though the specific case in the plaint is that the plaintiff and defendant had agreed to settle the accounts based on a one-time settlement, no such agreement has been placed on record. The appellant submits that the plaintiff, being a Limited Company, and the defendant, being a Scheduled Commercial Bank, obligations and commitments can be created only through documents, and no documentary evidence has been produced in support of the assertions made in the plaint and the evidence of PW1. Regarding the clause in Ext.A3 sale deed, which states the manner of appropriation of the sale consideration of `220 Lakhs, it is submitted that there is no agreement in Ext.A3 sale deed that the sale consideration of `220 Lakhs is accepted in full and final settlement of the liabilities. It is pointed out that in Ext.A8 letter issued by the Bank on 30.09.2000 to the Kerala Financial Corporation, the Bank has stated that the balance amount due from the plaintiff in one account is `198 Lakhs. Another aspect pointed out is R.F.A. No.347 of 2005 2025:KER:62522 -10- that the plaintiff did not make any complaint for six months after the execution of the sale deed, and if there was any coercion or threat on the part of the Bank, the same would have been objected to immediately.
8. The counsel for the appellant points out that the liability of ₹209.89 lakhs has been settled on payment of ₹175 lakhs, and thus a huge sum has been given as remission to the plaintiff, who has always been a defaulter. The counsel for the plaintiff submits that a reading of Ext.A3 is sufficient to show that there was an agreement to settle the liabilities by receiving ₹170 lakhs and that ₹5 lakhs paid subsequently, just before the execution of the sale deed, was under compulsion, since the plaintiff had to obtain the credit facility extended by KFC. It is contended that the evidence of PW1 and DW1 also confirms the above fact. Ext.A8 dated 30.09.2000 is also relied on to submit that the One Time Settlement was for a sum of ₹170 lakhs. It is argued that there is no document to show that before the execution of the sale deed, there was an agreement to adjust ₹175 lakhs instead of ₹170 lakhs towards the liability of the plaintiff. It is hence submitted that the adjustment of an R.F.A. No.347 of 2005 2025:KER:62522 -11- additional sum of ₹5 lakhs was unilateral. Regarding the compulsion, it is reiterated that to obtain the loan from the KFC, a closure certificate had to be obtained from the defendant, and for the issuance of the closure certificate, the plaintiff was compelled to pay an additional sum of ₹5 lakhs. It is also pointed out that the persons who attested Ext.A3 sale deed were not examined, and DW1, who was examined, could not state anything about the date on which it was agreed to increase the amount to ₹175 lakhs instead of ₹170 lakhs. It is hence submitted that the action of the defendant is hit by Section 72 of the Indian Contract Act. The counsel for the plaintiff submitted that the apparent reason for the levy of an additional amount of ₹5,00,000/- was that the sale deed was executed after 5 months of the agreed date, and the additional amount was the interest for the delay in performance. It is submitted that such a claim can only be treated as compensation and could not have been unilaterally adjusted by the defendant. It is hence submitted that the judgment of the trial court in decreeing the suit is fully justified. R.F.A. No.347 of 2005
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9. Sri P.Vijayaraghavan, counsel appearing for the appellant relied on the following judgments in favour of his contentions.
1. Mahabir Kishore & Ors. v. State of M.P., [(1989) 4 SCC 1]
2. Dhrangadhra Municipality & Ors. V Dhrangadhra Chemical Works Ltd. [1988 1 GLR 388 = Manu/GJ/0017/1987]
3. Mafatlal Industries Ltd. & Ors. v Union of India & Ors. [(1997) 5 SCC 536]
4. Afsar Sheikh & Anr. V. Soleman Bibi & Ors. [(1976) 2 SCC 142]
5. N.V.Ramaiah. v. State of AP & Ors. [AIR 1986 AP 361]
6. Ladli Parshad Jaiswal v. The Karnal Distillery Co. Ltd.
[AIR 1963 SC 1279]
7. State of Kerala & Anr. v. M.A.Mathai [(2007) 10 SCC 195]
8. Subhas Chandra Das Mushib v. Ganga Prosad Das Mushib & Ors. [AIR 1967 SC 878]
9. General Constructions v. South Indian Bank Ltd.
[(2016) 3 KLT 868].
10. M/s. Bhatia Plastics v. Peacock Industries Ltd. & Anr.
[AIR 1995 Delhi 144] R.F.A. No.347 of 2005 2025:KER:62522 -13-
11. Future Scaps Infra v. Ankurbhai Arunrao Pavle [AIR 2023 Gujarat 150]
12. Anthoyokkya Viswasa Samrakshana Samithi v.
Paulose [2013 (1) KLT 591]
13. Abdurahiman v. Asharaf Kalapeedikayil [2019 (2) KLT 282]
14. Sasanagouda v. Dr.S.B.Amarkhed & Ors. [AIR 1992 SC 1163]
15. Samuel Aaron v. Damodaran [1959 KLT 16]
16. Kumar Rohit v. Allahabad Bank [2017 (2) KLT SN 63 (Jhar)]
17. Union Bank of India v. G.K.Engineering Works [2018 1 KLT 367]
18. M/s Double Dot Finance Ltd. V. M/s Goyal MG Gases Ltd. & Anr. [ILR 2005 (1) Delhi 161]
19. Afro Asisan Agro Products (Singapore) Ltd. v.
Lekshmi Enterprises, [2023 (2) KLT 316]
20. Silymon v. Deepthi, [2023 (6) KLT 55]
21. Achambat Abdul Rahim v. Achambat Kunhalikutty Hajis son Muhammed Haroon and Ors. [2022 (3) KLJ 86]
22. Venugopal Company(M/s.) v. G.Sasikumar & Ors.
[2022 (1) KHC 169]
23. Hajira & Ors. v. Anto & Ors. [2018 (3) KHC 791(DB)].
24. Leela and Ors. v. Vasu & Ors. [2018(1) KHC 876]
25. Vijayan Nair B. v. S. Thankamani Amma, [2016 (1) KHC 469(DB)] R.F.A. No.347 of 2005 2025:KER:62522 -14-
26. Bachhaj Nahar v. Nilima Mandal & Anr. [(2008) 17 SCC 491]
27. Punnoose v. Mammi Amma [1962 KLT 354]
28. Moran Mar Basselios Catholics v. T.P.Avira & Ors.
[1958 KLT 721]
10. Smt. Shahana Karthikeyan, counsel appearing for the respondent relied on the following judgments in support of her arguments.
1. Syed Dastagir v T.R.Gopalakrishnasetty [(1999) 6 SCC 337]
2. Madan Gopal Kanodia v. Mamraj Maniram & Ors.
[(1977) 1 SCC 669]
3. Ram Sarup Gupta (Dead) by LRs v Bishun Narain Inter College & Ors. [AIR 1987 Supreme Court 1242]
4. Dhan Singh Yadav & Anr. v Badri Prasad [AIR 1963 Rajasthan 198]
5. Trikamdas Udeshi v Bombay Municipal Corporation [AIR 1954 Bombay 427]
6. Atlas Express Ltd. V. Kafco (Importers and Distributors) Ltd. [1989 1 All England Reports 641]
7. Abati Bezbaruah v. Dy. Director General [2003 KHC 1269]
8. Petlad Bulakhidas Mills Co. Ltd. & Anr. v Union of India & Anr. [AIR 1970 Gujarat 59]
9. T.G.M.Asadi & Sons v The Coffee Board & Anr. [AIR 1969 Mysore 230] R.F.A. No.347 of 2005 2025:KER:62522 -15-
10. Union of India & Ors. V Steel Authority of India Ltd.
[AIR 1997 Orissa 77] CONSIDERATION:-
11. I shall proceed to consider the legal position in the backdrop of the statutory requirements specified in Section 72 of the Indian Contract Act, 1872, which reads thus;
"A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it"
12. I shall first consider the decisions relied on by the counsel for the appellant in support of his contentions. On the question of Pleadings required in such cases:-
13. In Afsar Sheikh (supra), the Hon'ble Supreme Court held that while it is true that "undue influence", "fraud", "misrepresentation" are cognate vices which may overlap in some cases, they are in law distinct categories, and are, in view of Order 6 Rule 4, read with Order 6 Rule 2 of the Code of Civil Procedure, required to be separately pleaded, with specificity, particularity and precision. Referring to the principle conveyed by the maxim secundum allegata et probata, the Court held R.F.A. No.347 of 2005 2025:KER:62522 -16- that the plaintiff could succeed only by what he had alleged and proved and cannot be allowed to travel beyond what was pleaded by him and put in issue. It was further held that on the failure of the plaintiff to prove the case pleaded, the court could not conjure up a new case for him by stretching his pleading and reading into it something which was not there, nor in issue, with the aid of an extraneous document.
14. In Ladli Parshad (supra), the Hon'ble Supreme Court while dealing with a case of undue influence, expressed the same view that the party relying on such a plea should state the precise nature of the influence exercised, the manner of use of the influence and the unfair advantage obtained by the other. In M.A.Mathai (supra), the Hon'ble Supreme Court while dealing with a plea of coercion, held that the plaintiff must bring material and lead evidence to support the contention that there was lack of free will and free consent and that the circumstances then prevailing necessitated the plaintiff to agree to the commands of the defendant into entering in supplemental agreements. The Apex Court held that there cannot be an inferential conclusion regarding such matters. In R.F.A. No.347 of 2005 2025:KER:62522 -17- Subhas Chandra (supra), the Hon'ble Supreme Court relying on the observations in Ladli Parshad (supra), held that before examining whether undue influence was exercised, the court has to scrutinise the pleadings to find out whether such a case has been made out and full particulars of the undue influence has been stated. In Achambat Abdul Rahim (supra), a learned Single Judge of this Court held that undue influence cannot be proved by adducing any amount of evidence, in the absence of specific pleadings and it is the burden of the party to ensure that the particulars are clearly set out in the pleadings. The importance of pleadings was stated by another learned Single Judge in the decision in Venugopal Company (supra). The Court in the process referred to the judgment of the Hon'ble Supreme Court in Ram Sarup Gupta (supra), wherein the Hon'ble Supreme Court held that it is well settled that in the absence of pleading, evidence if any, produced by the parties cannot be considered. The Court also observed that it is the duty of the Court to ascertain the substance of the pleadings to determine the question and not place undue emphasis on the form. In Bachhaj Nahar R.F.A. No.347 of 2005 2025:KER:62522 -18- (supra), the Hon'ble Supreme Court held that no relief can be granted on the strength of the evidence alone, in the absence of pleading. The above decision was referred to by a Division Bench of this Court in a recent decision in Silymon (supra), to emphasise on the necessity of pleadings. In Moran Mar Basselios Catholicos (supra), a Constitution Bench of the Hon'ble Supreme Court held that the parties cannot go outside the pleadings and set up a new case. In Punnoose (supra), a learned Single Judge of this Court held that the decision of a case cannot be based on grounds outside the pleadings of the parties and that it is not the function of the Court to construct a case not pleaded by the parties. In Leela (supra), a learned Single Judge of this Court while dealing the validity of a gift deed, considered the question of sufficiency of pleadings and held that Order VI Rule 4 and Order VIII Rules 3,4 and 5 have been incorporated in the Code of Civil Procedure not merely as a rule of procedure and they assume significance because in a fair trial, no party shall be taken by surprise and a fair opportunity should be afforded to meet the contentions of the other party. In Vijayan Nair (supra), a Division Bench of this R.F.A. No.347 of 2005 2025:KER:62522 -19- Court held that new facts stated in proof affidavit at variance with the pleadings cannot be taken into account while appreciating the evidence.
On the question of Unjust Enrichment:-
15. A Nine member Constitution Bench of the Hon'ble Supreme Court considered the question of refund of amounts collected as tax, under mistake or coercion, by invoking Section 72 of the Contract Act in Mafatlal Industries (supra). The Court held that an action under Section 72 was one in restitution and where the plaintiff has not suffered any real loss or prejudice, it would be unjust to allow or decree his claim. In Dhrangadhra (supra), a Division Bench of the Gujarat High Court considered a case relating to refund of Octroi, allegedly collected by mistake/coercion. The Court reiterated the requirement of precise pleadings regarding the mistake or coercion and also held that apart from the requirement spelt out by Section 72, there is an additional requirement which lies embedded by necessary implication, that the plaintiff must be entitled in law to receive back the amount of money or anything R.F.A. No.347 of 2005 2025:KER:62522 -20- delivered by mistake or coercion. The court further held that in an action based on quasi contract claiming restitution, it has to be shown that the refusal to grant relief would amount to unjust enrichment of the defendant. The question of unjust enrichment in such cases was considered by the Hon'ble Supreme court in Mahabir Kishore (supra). The Apex Court held that the doctrine of "unjust enrichment" is that in certain situation it would be "unjust" to allow the defendant to retain a benefit at the plaintiff's expense. The Court drew a comparison with the English law and observed that so far as India is concerned the aspect is codified under Section 72 of the Contract Act and hence the statutory provision will apply. In the words of the Hon'ble Supreme Court, "the principle of unjust enrichment requires: first, that the defendant has been "enriched" by the receipt of the "benefit"; secondly, that this enrichment is "at the expense of the plaintiff"; and thirdly, that the retention of the enrichment be unjust." In N.V.Ramaiah (supra) a Division Bench of the Andhra Pradesh High Court considered a claim for refund of fee illegally collected, under Section 72. The court held that it is for the plaintiff to plead and satisfy the court that, R.F.A. No.347 of 2005 2025:KER:62522 -21- by grant of the relief to him, he would not be unjustly enriched. The court observed that a provision of law designed to prevent unjust enrichment cannot be made use of precisely to gain unjust enrichment. In G.K.Engineering Works (supra), a Division Bench of this Court considered a case where a Bank collected larger amount than what it was entitled to collect under a decree. The Court held that the Bank is not entitled to retain the excess amount collected, finding that it was a case of unjust enrichment. In Kumar Rohit (supra), the Jharkhand High Court was considering a case of auction sale conducted by a Bank, of a property, which could not have been sold by the Bank without the prior approval of the Housing Board. The court held that forfeiture of the amount deposited by the successful bidder would amount to unjust enrichment.
16. I shall now refer to the judgments referred to by the counsel for the respondent as against the above contentions. In Dhan Singh Yadav (supra), a learned Single Judge of the Rajasthan High Court held that applicability of Section 72 does not depend on the existence of a contract. That was a case in which a postal employee who made over payment by bona fide R.F.A. No.347 of 2005 2025:KER:62522 -22- mistake of fact to a holder of a postal cash certificate, sued the holder since the money was recovered by the Postal Department from the employee. The Court held that the action was maintainable, despite the absence of any privity of contract between the plaintiff and the defendant. In T.G.M.Asadi (supra), a Division Bench of the Mysore High Court, held that the word "coercion" in Section 72 has to be understood in its ordinary sense and includes every kind of compulsion, even if it does not measure up to "coercion" as defined by Section 15 of the Contract Act. In Petlad Bulakhidas (supra), a learned Single Judge of the Gujarat High Court took the same view and held that the term "coercion" used in Section 72 merely means payment under compulsion, which the defendant has no right to claim and is not the same as the definition contained in Section 15 of the Contract Act. In Atlas Express (supra), the Queens Bench Division (Commercial Court) of England, held that where a party to a contract was forced by the other party to renegotiate the terms of the contract to his disadvantage and had no alternative but to accept the new terms offered, his apparent consent to the new terms was vitiated by economic R.F.A. No.347 of 2005 2025:KER:62522 -23- duress. The court held that there was no consideration for the new agreement. As against the above contention, the counsel for the appellant referred to the decision of a learned Single Judge of the Delhi High Court in Double Dot Finance (supra), wherein it was held that economic duress or coercion, in contractual relations, cannot be applied to mere financial pressure and should be a situation where the person alleging the coercion did not have any alternative course open to him. The court held that bargaining and thereafter accepting an offer by give and take to solve one's financial difficulties cannot be treated as coercion or duress, since such decisions are common in trade and commerce where decisions are taken which might not have been taken but for their immediate financial requirements. In Trikamdas Udeshi (supra), the Bombay High Court held that amount paid as fine to avoid prosecution for travelling ticketless was recoverable under Section 72. At first blush, the said conclusion may appear to be preposterous. But, it can be seen from a reading of the judgment that the penalty was levied without legal authority. The court held that the petitioner before the Court could not have refused to pay R.F.A. No.347 of 2005 2025:KER:62522 -24- the amount if he so desired and the parties cannot be "in pari delicto". In Steel Authority (supra), the Orissa High Court was dealing with the question whether under Section 72, there is any distinction between mistake of law and mistake of fact. The Court held that there was no such distinction and the principle involved was equitable restitution. The judgment is not relevant to the facts in issue in this appeal.
17. The following principles can be culled out from the above decisions:
a) A suit under Section 72 is based on the principles of restitution. b) To lay a proper claim, the plaintiff should plead
specifically the facts which would constitute the ingredients of Section 72, which in the case on hand is "coercion".
c) Coercion for the purpose of Section 72 is not to be treated as confined to the definition under Section 15 of the Contract Act and is to be understood to mean payment under compulsion.
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d) Since the action is based on the principles of equitable restitution, the plaintiff should plead and prove that if the decree is granted, he will not be unjustly enriched.
e) Coercion, in contractual relations, cannot mean mere financial pressure, and accepting an offer after bargaining by give and take, to solve one's financial difficulties cannot be treated as coercion or duress.
18. I shall examine the facts pleaded and proved in the case, keeping in mind the above principles. Ext.A1 agreement for sale was executed on 31.01.2000 between the plaintiff and the defendant. A reading of Ext.A1 would show that it only deals with the sale of 9.896 cents of land with a multi-storeyed building therein and it does not in any manner speak about closing of the loan account of the plaintiff. Ext.A2 dated 11.02.2000 is a letter from the defendant to the Chief Manager of State Bank of Travancore and it only seeks details of the date by which the State Bank of Travancore would vacate the premises so as to facilitate the completion of the sale proposed in Ext.A1. Ext.A3 is a copy of the sale deed executed between the plaintiff and the defendant, the document which is relied on R.F.A. No.347 of 2005 2025:KER:62522 -26- by the plaintiff to state that there was an agreement between the parties to wipe off the entire liabilities of the plaintiff only says that the sale consideration is to be `220 lakhs and towards the sale consideration the vendor had authorised the purchaser bank to adjust a sum of `170 Lakhs towards their outstanding in the books of accounts and to adjust Rs50. lakhs towards outstanding in the account of Sree Anand Refineries Limited. The document does not say that by the above adjustment of `170 Lakhs, the entire loan liability of the plaintiff will be wiped off. Ext.A4 is the copy of Form No.37-I issued under Section 269UC of the Income Tax Act, 1961, which also does not indicate that the payment of `170 Lakhs is intended to close the entire loan liability of the plaintiff. Ext.A5 is a letter dated 21.12.2000 from the plaintiff to the defendant regarding the vacating of the premises by the tenants. The said letter also does not give any indication regarding the closure of the loan account. Ext.A6 is Form No.34A submitted by the plaintiff to the Income Tax Officer, which again does not state anything about the loan account. Ext.A8 is a letter dated 30.09.2000 from the plaintiff to the Kerala Financial Corporation informing them R.F.A. No.347 of 2005 2025:KER:62522 -27- about the credit limit of `170 Lakhs being enjoyed by the plaintiff since 1996, the outstanding as on that day and the fact that the company had approached the bank with a one-time settlement for the dues at ₹170 lakhs. This is the only document which says about the one-time settlement at ₹170 lakhs. The letter does not however say that the bank has accepted the said proposal for settling the dues. Ext.A9 is a letter dated 28.12.2000 from the Bank to the plaintiff stating that the vehicle loan has been closed on full and final settlement. The said letter is contemporaneous to the execution of Ext.A3 sale deed. Ext.A10 is the letter dated 28.12.2000 from the defendant to Sri Ananth Refineries Ltd. informing them that a sum of ₹45 lakhs has been credited to the crash credit account and that the balance outstanding in the cash credit account is ₹4,60,884.37 and the balance outstanding in the term loan account is ₹44,78,210/-. Ext.A12 is a copy of the communication from the bank to the plaintiff at the time of availing of the loan. Ext.A13 is a loan sanction letter from the Kerala Financial Corporation to Sree Ananth Refineries Limited, Kerala dated 27.1.2001, which is produced to show that the R.F.A. No.347 of 2005 2025:KER:62522 -28- property has been mortgaged with KFC after closing the loan account with the defendant. Ext.A7 dated 17.02.2001 is the certificate issued by the defendant to the plaintiff stating that the plaintiff has settled all their dues in full and the defendant has no charge over the assets of the company. Ext.A14 dated 14.05.2001 is the suit notice issued by the plaintiff to the defendant. The suit notice does not state anything about any coercion. Instead, it says that the adjustment of ₹175 Lakhs instead of ₹170 Lakhs was contrary to the specific terms mutually agreed and was illegal, unjust, unwarranted and improper. This would go to show that till the filing of the plaint, the plaintiff did not have a case of coercion at any point of time. Even in the plaint, there is only a stray sentence about coercion, and it is not specific. The averments in the plaint are more in the nature of claim against a breach of agreement. Ext.A15 is the reply notice sent on behalf of the defendant. Ext.A16 dated 14.11.2000 is the loan sanction letter from the Kerala Financial Corporation to the plaintiff. It can thus be seen that none of the documents produced would should that the appellant had agreed to close the loan transaction of the R.F.A. No.347 of 2005 2025:KER:62522 -29- plaintiff on receipt of `170 lakhs. The contemporaneous documents will on the other hand show that the plaintiff was well aware that only `45 lakhs had been appropriated from the sale consideration towards the loan availed by the sister concern M/s. Sree Ananth Refineries Ltd. and that the balance outstanding in their cash credit account was ₹4,60,884.37 and the term loan account was ₹44,78,210/-. It is also in evidence that the loan account of the sister concern was also later closed. Going by the pleadings in the case, it is seen that there are no pleadings regarding the unjust enrichment. In fact, it is admitted that the loan was closed based on substantial remission granted by the Bank. It can thus be no case of unjust enrichment by the Bank.
19. The counsel for the respondent/plaintiff argued that it is evident from the pleadings that the relationship between the parties was that of creditor-debtor and that the factum of coercion pleaded is sufficient to show that unless the payment was made, the sale deed between the parties would not have been registered. By payment under duress, what is in effect R.F.A. No.347 of 2005 2025:KER:62522 -30- stated is that there was wrongful appropriation of the sale consideration towards the loan of the plaintiff instead of that of the sister concern and a breach of an alleged agreement to close the loan account of the plaintiff for a lesser amount. Admittedly, the plaintiff is a Limited Company, and the defendant is a Banking Company. The specific pleading in the plaint is that there was an agreement between the plaintiff and defendant for a one-time settlement. The above allegation is denied by the defendant. No valid evidence has been adduced to show the existence of such an agreement. It is admitted that the sale consideration fixed in Ext.A1 agreement was not varied at the time of execution of Ext.A3 sale deed. Even though the sale deed says that a sum of `50 lakhs out of the sale consideration is to be appropriated towards the loan account of the sister concern, as a matter of fact only `45 lakhs was appropriated towards the said loan account. Curiously, the sister concern has not chosen to raise any objection to the above conduct, though it resulted in their liability being not reduced to that extent. The averments in the plaint are to the effect that there was a breach of the agreement regarding R.F.A. No.347 of 2005 2025:KER:62522 -31- settlement of loan account on receipt of `170 lakhs. To bring the case under Section 72, it is stated that the defendant insisted before the registration of the sale deed that the plaintiff should agree that an additional sum of `5 lakhs also should be taken from the sale consideration for wiping off the liability of the plaintiff. However, there is no evidence available regarding any such agreement. The contention appears to be that such an agreement should be inferred from the fact that a sum of `175 lakhs was appropriated towards the loan account of the plaintiff to close the two loan accounts. It is the specific contention in the plaint that the agreement to sell, the sale deed, the certificates issued by the defendant and the correspondence with the bank would show that the agreement was to wipe off the debt of the plaintiff completely. As already stated, the above documents would only show an agreement for appropriation of the sale proceeds and does not specifically state anything about an agreement or an undertaking by the bank to wipe off the entire liabilities of the plaintiff by receiving `170 lakhs. The defendant has stated in the written statement that at the time of execution of Ext.A1 agreement the total outstanding of the R.F.A. No.347 of 2005 2025:KER:62522 -32- plaintiff was `190.68 in two loan accounts, which increased to `194.35 lakhs by 31.7.2000. The outstanding of the sister concern on 31.7.2000 was stated to be `89.97 lakhs. It is further stated that the total amount due on 28.12.2000, at the time of sale was `209.89 lakhs and on the request of the plaintiff, it was agreed to be closed on adjustment of `175 lakhs out of the sale consideration. It is stated that the loan account could have been closed on receipt of `170 lakhs, if the sale deed had been executed by 31.7.2000 as agreed and since there was delay, and the total outstanding increased, it was mutually agreed after personal discussions to adjust `45 lakhs towards the loan account of the sister concern. It is also stated that the loan account of sister concern was closed only in February 2021 after remittance of a sum of `43.31 lakhs. It is also stated that the defendant had kept in abeyance the mounting of interest in the term loan account of the sister concern during the delayed period. Except the mutual agreement regarding appropriation, there is no denial of the other facts regarding the closing of the loan account of the sister concern. Curiously, the sister concern was not joined as a R.F.A. No.347 of 2005 2025:KER:62522 -33- plaintiff in the suit, even though the transactions involved payment towards the loan accounts of two entities. The trial court has merely based on the authorization in Ext.A3 sale deed to adjust `170 lakhs out of the sale consideration towards the loan account of the plaintiff, concluded that "it has been proved that the plaintiff (sic) agreed to adjust `170 lakhs to wipe off the liability of the plaintiff". Such a conclusion was totally unwarranted. Another reason stated for such a conclusion is that there is no document to show that the plaintiff had agreed for appropriation of `175 lakhs instead of `170 lakhs, prior to the sale deed and that no date is mentioned regarding the discussion which had taken place. It is also stated that the witness to the sale deed were not examined. The above factors cannot have much relevance. The witness to the sale deed, even if examined, cannot speak about the agreement between the parties regarding the appropriation of the sale proceeds towards the loan accounts. There is no dispute regarding the total consideration in the sale deed. The trial court had placed reliance on the decision in Atlas Express (supra) and Trikamdas Udeshi (supra) to find that when amount is not R.F.A. No.347 of 2005 2025:KER:62522 -34- legally payable and if the plaintiff is required to pay it under compulsion, the plaintiff is entitled to repayment unless the defendant can show that they had right to recover it under law. The reliance placed is not justified. This is not a case where any additional sum was demanded at the time of registration of the sale deed. The agreement for sale did not speak of any appropriation. The sale deed was executed for the consideration which was agreed upon. The agreement for sale and the sale deed are not agreements relating to the closure of the loan accounts of the plaintiff and its sister concern and the only connection it has is that the sale consideration is by adjustment towards 4 loan accounts. There is no separate agreement regarding the said apportionment, entered into between the parties at any time before the sale deed executed in December 2000. Even the sale deed only says that the Bank is authorized to appropriate `170 lakhs of the sale consideration towards the loan of the plaintiff and the balance towards the loan of the sister concern. In the absence of any agreement regarding the closure of the account either as one-time settlement or otherwise, coupled with the fact that the loans of the plaintiff R.F.A. No.347 of 2005 2025:KER:62522 -35- were closed on the date of the sale deed and that of the sister concern were closed in February, 2021, it cannot be said that the sum of `175 lakhs were not legally payable by the plaintiff to the defendant. Admittedly, more amount was legally payable. Moreover, there is no pleading and proof regarding any unjust enrichment by the defendant or absence of unjust enrichment for the plaintiff if the plaint claim is allowed.
20. The contention that no notice was given by the defendant to the plaintiff to the effect that compensation will be claimed by way of interest for delay is also not sustainable, since the sale consideration had not been in any manner increased and since there was no agreement regarding the appropriation and closure of liability in Ext.A1 sale agreement.
21. During the hearing of the appeal, on 12.9.2024, this Court wanted clarity regarding the amount for which the loan account of the sister concern was closed and asked the counsel for the respondent/plaintiff to submit on the same. The plaintiff thereupon filed I.A.No.2 of 2024 for a direction to the appellant to produce the statement of accounts of the sister concern, who R.F.A. No.347 of 2005 2025:KER:62522 -36- is not a party to the suit. The appellant filed a counter affidavit stating that the accounts are not available due to the long passage of time. Since it is pleaded in the written statement that the account of the sister concern was closed in February 2021 on payment of `43.31 lakhs, it is not necessary to delve into the question any further.
22. Even though arguments were advanced regarding the interest granted by the trial court, it is not necessary to go into the question of the interest that was granted by the trial court, since I find that the suit could not have been decreed and was liable to be dismissed.
In the above circumstances, the appeal is allowed, and the suit is dismissed. There will be no order as to costs, in the circumstances of the case.
Sd/-
T.R. RAVI JUDGE dsn