Karnataka High Court
Prakash M vs Narayana K Mendon on 22 October, 2013
Author: N.Kumar
Bench: N.Kumar
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IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 22ND DAY OF OCTOBER 2013
PRESENT
THE HON'BLE MR.JUSTICE N.KUMAR
AND
THE HON'BLE MR.JUSTICE H.BILLAPPA
R.F.A.No.1728/2010
BETWEEN:
Prakash.M.
45 years,
S/o.H.T.Poojary,
Resident of 'Bridavan',
Malpe, Kedavoor Village,
Udupi Taluk,
Post Kodavoor - 576 101. ...Appellant
(By Sri.Vyasa Rao.K.S., Adv.,)
AND:
1. Narayana.K.Mendon,
64 years,
S/o.Kariya Amin.
2. Kamal,
36 years,
S/o.Narayana Mendon.
Both are residing near Canara
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Bank, Kedavoor Village,
Udupi Taluk,
Post Kodashrama - 576 116.
3. M/s.Rubynko Group,
Registered partnership firm
At No.33, Industrial Area,
Manipal - 576 119.
By its Managing Director
B.N.Shankara Poojary.
4. K.Gopalakrishna Achar,
52 years,
S/o.Late Y.N.K.Achar,
Residing at 'Geetha Nilaya',
Santhekatte, Kallianpura,
Udupi Taluk,
Post Kallianpura - 576 125.
5. B.N.Shankara Poojary,
52 years,
S/o.Sukra Poojary,
Residing at "Laxmi Nilaya",
Varamballi Village,
Udupi Taluk,
Post: Brahmavar - 576 213. ...Respondents
(By Sri.S.V.Shastri, Adv., for R1 & 2;
Sri.Vighneshwa.S.Shastri, Adv., for R4 & 5
R3 Notice dispensed with v/o. dtd 10.11.2011)
*******
This appeal is filed under section 96 of CPC, against the
judgment and decree dated 19.7.2010 passed in
O.S.No.151/2000 on the file of the Prl. Senior Civil Judge,
Udupi, decreeing the suit of the plaintiff against defendant
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No.1(c) with cost and dismissing the suit against defendant
No.1, 1(a) and (b) for recovery of money.
This appeal coming on for admission this day, N.Kumar
J., delivered the following:
JUDGMENT
This appeal is by a partner of the firm challenging the judgment and decree of the Trial Court which has decreed the suit in his individual capacity.
2. For the purpose of convenience, the parties are referred to as they are referred to in the original suit.
3. The first plaintiff is Narayana K. Mendon and the second plaintiff Kamal is his son. The defendant is M/s Rubynko Group, a registered partnership firm and is represented by three partners i.e. (a) K. Gopalakrishna Achar
(b) B.N.Shankara Poojary (c) Prakash M. The plaintiffs have sued not only the firm but also the partners personally. -4-
4. The defendant-partnership firm was reconstituted under a deed of partnership dated 1.11.1998. The firm was engaged in the business of manufacture and sale of hallow bricks and soft drinks having its place of business at Plot No.33, Industrial Area, Manipal Post, Manipal 576 119, Udupi Taluk. Prakash.M., one of the partners of the defendant firm was looking for a partner to join the defendant firm as a working partner. He came in contact with the first plaintiff. The first plaintiff then suggested Prakash M to induct his son the second plaintiff as a partner to the defendant firm. After negotiation, it was agreed and the agreement was reduced to writing by a deed dated 1.11.1997. A Xerox copy of the said agreement was produced along with the plaint. Under the agreement 25% of the supposed market value of the assets of the defendant firm i.e. Rs.13,75,000/- had to be contributed by the plaintiff. It has to be paid in three instalments. It is also stipulated that until and unless the said amount is paid, the second plaintiff will not be admitted as a partner of the firm. Even before such agreement was entered into Prakash M -5- insisted for payment of money. Accordingly a sum of Rs.2 lakhs was paid to Prakash on 12.10.1997. A sum of Rs.1,25,000/- was paid on 15.10.1997. Again a sum of Rs.2 lakhs was paid. The said amounts have been duly acknowledged by Prakash by issuing duly stamped receipts. Again he paid a sum of Rs.2 lakhs on 10.11.1997 and a further sum of Rs.31,000/- on 6.8.1998 for which also duly stamped receipts were issued by Prakash. The defendant firm had a liability of Rs.1,50,000/- towards principal and interest in a finance called Shesha Finance, Malpe as on 31.3.1999. Prakash requested the plaintiff to discharge the said liability of Rs.1,50,000/-. Accordingly the first plaintiff paid a sum of Rs.1,50,000/- to Shesha Finance, Malpe. Thus, in all the plaintiffs have paid a sum of Rs.7,06,000/-. All the amounts have been duly acknowledged by passing separate stamped receipts. When the plaintiff discharged the debt amount of Rs.1,50,000/- due by the firm to Shesha Finance, the partners of the defendant firm viz., N.Shankar Poojary -6- and Prakash issued a cheque for Rs.1,50,000/- dated 31.3.1999 in favour of the first plaintiff.
5. The plaintiffs were facing finance problems. They were not able to pay the balance sale consideration agreed upon. Therefore, they requested the defendants to return the money which was paid to them. In fact a letter dated 22.10.1999 was handed over by the first plaintiff to Shankar Poojary and Prakash requesting them to repay the said amount. When inspite of several requests the said amount was not repaid, they got issued a legal notice dated 5.7.2000 claiming Rs.7,06,000/- with interest at 18% p.a. from the respective dates of payment till payment. The said cover was not received by the first defendant. However, the other partners have received the same. No reply was sent and money repaid. Therefore, they were constrained to file the suit for recovery of a sum of Rs.10,40,252/- and Rs.500/- towards legal charges, in all Rs.10,42,752/-. -7-
6. After service of summons, the partners/Defendant 1 (a) and (b) filed a detailed written statement denying all the allegations in the plaint, denying the agreement entered for induction of the second plaintiff into the firm. They denied all the payments. They further contended that Prakash, the other partner had no authority to borrow any money on behalf of the firm. Further it was specifically pleaded, the alleged cheque is not valid and binding on the defendants firm or B.N.Shankara Poojary. It was submitted that Shankara Poojary used to sign some blank cheque leaves of the defendants firm to avoid any inconvenience. They contend that it may also be possible that one of the blank cheque so signed by Shankara Poojary might have been misused by Prakash by manipulating the alleged cheque dated 31.3.1999 for Rs.1.50 lakhs in the name of the plaintiff. The said cheque must be a collusive, fraudulent and concocted one. However, the defendant Prakash though was duly served with the suit summons, he did not enter appearance nor filed any written statement. However, on 21.2.2009 he filed the written -8- statement with an application for condoning the delay. The said application came to be rejected by the Trial Court. Aggrieved by the same, he preferred a writ petition No.25573/2009 which also came to be rejected. However, on the aforesaid pleadings, the Trial Court framed the following issues:
1. Whether the plaintiffs prove that defendant 1(c) entered into an agreement on 1.11.1997 on behalf of the defendant firm agreeing to take the plaintiff as a partner of the defendant firm, subject to the terms and conditions of the said agreement?
2. Whether the plaintiffs prove that in pursuance of the agreement dated 1.11.1997 plaintiffs paid a sum of Rs.7,06,000/- by way of advance towards contribution of 2nd plaintiffs share in the partnership firm?
3. Whether the plaintiffs are entitled to recover the amount as claimed?
4. Whether the plaintiffs are entitled to claim interest, if so, at what rate?-9-
5. What decree or order?
7. The plaintiffs in order to establish their claim, examined the first plaintiff as PW-1 and produced 11 documents which are marked as Ex.P1 to P11. On behalf of the defendants, none stepped into the witness box and no documents were produced.
8. The Trial Court on appreciation of the aforesaid oral and documents evidence on record held that the agreement set up by the plaintiff is not proved. However, the payment of Rs.7,56,000/- is proved in view of the stamped receipts issued by the said Prakash acknowledging the said liability. However, the acknowledgement of the said liability was not on behalf of the partnership firm as nothing is produced on record to show that he was duly authorised to receive the said amount towards partnership. It also held, it is probable that Prakash has misused the cheque which is signed by Shankara Poojary. Therefore, merely because his signature is found on the cheque, he is not liable to pay the
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amount mentioned in the said cheque. As the evidence on record clearly establishes that Prakash received the amounts which are set out in the plaint coupled with the fact that he is not contesting the matter, he is liable to repay the said amount. But neither the firm nor other partners are liable to pay the said amount. Accordingly the suit of the plaintiff against defendant No.1(a) and (b) was dismissed and the suit was decreed against defendant No.1(c) with cost with future interest @ 12% p.a. on principal amount of Rs.10,40,252/-
9. This appeal is filed by the defendant No.1(c). The learned counsel appearing for the appellant assailing the impugned judgment and decree contended, when once the Trial Court recorded a finding that the agreement set up by the plaintiff is not established and in fact when the original agreement was not produced before the court, the court could not have decreed the suit even against defendant No.1(c). Though defendant No.1(c) could not file the statement within the time prescribed, he did file a written statement with an
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application for condonation of delay. By rejecting the said application, a reasonable opportunity to defend the suit has been denied to the defendant No.1(c) and therefore on the short ground, the judgment and decree of the Trial Court requires to be set aside. Even otherwise, when Ex.P5 the cheque bears the signature of defendant No.1(b), the Trial Court committed a serious error in not decreeing the suit to that extent against defendant No.1(b) and therefore, he submits that the judgment and decree of the Trial Court requires to be set aside.
10. Per contra, the learned counsel appearing for the plaintiff as well as defendant Nos.1(a) and (b) supported the impugned judgment and decree.
11. In the light of the aforesaid facts and rival contentions, the points that arise for our consideration in this appeal are:
1. Whether the Trial Court was justified in decreeing the suit of the plaintiff against defendant No.1(c) after
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holding that the agreement set up by the plaintiff under which the payments were made is not proved?
2. Whether the Trial Court was justified in not permitting the written statement to be taken on record by denying a reasonable opportunity to the defendant 1(c)?
3. Whether the Trial Court was justified in not decreeing the suit against defendant Nos.1(a) and (b) at any rate insofar as defendant No.1(b) is concerned to the extent of the amount in the cheque?
Point No.1
12. It is true that in the plaint the specific case pleaded by the plaintiff is, the defendant No.1(c) approached the 1st plaintiff for financial assistance for the partnership firm. The 1st plaintiff in turn suggested to him that he would provide financial assistance provided his son, the second plaintiff is taken as a partner. 25% of the assets of the partnership was to be his contribution on behalf of his son. According to the defendant No.1(c), 25% of the assets of the partnership firm was Rs.13,75,000/-. The plaintiff accepted
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the same and did make payments of Rs.2 lakhs on 12.10.97, Rs.1,25,000/- on 15.10.97, another sum of Rs.2 lakhs on 10.11.97 and Rs.31,000/- on 6.8.1998. Defendant No.1(c) has executed duly stamped receipts in the letter head of the firm. The case of the plaintiff is that he has paid Rs.1,50,000/- to Shesha Finance, Malpe, on behalf of the firm to discharge their debt. In consideration of the same, the defendants issued a cheque for Rs.1,50,000/- which is marked as Ex.P5 in the case. Thus the plaintiff has paid a sum of Rs.7,06,000/-.
13. The Trial Court on appreciation of the evidence on record has held that the agreement set up by the plaintiff is not established. Further, it has recorded a finding that the defendant No.1(c) had no authority to borrow money from the plaintiff or enter into any transaction with the plaintiff. Though Ex.P5 bears the signature of defendant No.1(b), he was in the habit of issuing blank cheques which has been misused by defendant No.1(c) and therefore, he is not liable
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even to that extent. The plaintiff against whom the findings are recorded has not chosen to file any appeal. As no decree was passed against defendant Nos.1(a) and (b), the question of they challenging the said findings would not arise. The said findings are challenged by defendant No.1(c). The Trial Court has categorically recorded a finding that the plaintiff has paid the aforesaid amount to defendant No.1(c). The defendant No.1(c) acknowledging the liability has issued duly stamped receipts in the receipt book of the defendant firm. It shows that he has received the money from the plaintiff. Though he was served with suit summons and earlier to it legal notice, he has not contested the claim. By the time he made attempts to file the written statement, time had elapsed and therefore he was not permitted to file the written statement. In those circumstances it was of the view that the evidence on record, both oral and documentary, clearly establishes the liability of defendant No.1(c) to repay the said claim.
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14. We have gone through the evidence of the parties and looked into the documents which are marked and we are satisfied from the aforesaid material on record that the findings recorded by the Trial Court that defendant No.1(c) received the said amount, he has executed stamped receipts in the receipt book of the defendant's firm and therefore he is liable to repay the said amount with interest is justified and it does not call for interference.
Point No.2
15. Insofar as denial of an opportunity is concerned, he has been duly served with the summons. 30 days time is prescribed to file the written statement from the date of service of summons. If for any reason, he could not do so, he is entitled to seek extension of another 60 days. After 60 days he has no right to seek for permission to file the written statement or to condone the delay in filing the written statement. It is only in exceptional cases, where the court in order to do justice, may grant permission. The Trial Court
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rightly did not extend discretion in favour of defendant No.1(c) as firstly, delay in approaching the court has not been explained properly, more than all that, having regard to the circumstances of this case, there is an acknowledgment of liability in writing. In fact being aggrieved by the said order refusing an opportunity, the defendant No.1(c) has preferred W.P.No.25573/2009 which is dismissed. Therefore, now it is not open to him to re-agitate the said question and therefore, we answer that point in the affirmative.
Point No.3
16. Insofar as not passing the decree in favour of defendant Nos.1(a) and (b) is concerned, the plaintiff has not chosen to file any appeal challenging the said findings in an appeal. This court cannot foist the liability on co-defendants against whom no liability is fastened by the Trial Court in an appeal preferred by a co-defendant. In that view of the matter, we do not see any substance in the said contention also.
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For the aforesaid reasons, we do not see any merit in this appeal. Accordingly the appeal is dismissed with costs.
Sd/-
JUDGE.
Sd/-
JUDGE.
Dvr: