Delhi District Court
Memo Of Parties vs Smt. Bharti Devi on 16 August, 2011
IN THE COURT OF SHRI VIKRAM CIVIL JUDGE OF (NORTH) DISTRICT,
TIS HAZARI COURTDELHI
Suit No.840/06
Unique ID No.02401C5725722004
MEMO OF PARTIES:
Sh. Birender Singh Kangar
R/o H.No. 1/1390, BJ Block,
Mansarovar Park,
Delhi110099
...........Plaintiff
VERSUS
Smt. Bharti Devi
W/o Late Sh. Lalit Kumar
Master Tushar
S/o Late sh. Lalit Kumar
Both R/o Shiv Colony,
Behind Good Luck School
Heli Mandi, Pataudi,
District Gurgaon, Haryana
..........Defendant
Date of Institution of suit: 22.09.2004
Date on which judgment was reserved: 06.08.2011
Date of announcement of judgment: 16.08.2011
Suit For Recovery
Judgment
1.By this judgment I shall dispose of a suit for recovery of Rs. 81,218/ alongwith pendentelite and future interest @ 12% per annum.
2. Brief facts as per the plaint are the plaintiff and one Late Sh. Lalit Kumar were friends and were working in department of telecommunication in Delhi. Sh. Lalit Kumar was in urgent need of money for purchasing a residential plot in his Suit No.840/06 1 locality and requested plaintiff to arrange Rs. 65000/ as friendly loan. Conceding to request of Sh. Lalit Kumar plaintiff arranged the money from ICICI Bank and gave it to Sh. Lalit Kumar by way of cheque No. 953587 dt. 22.12.2001. Sh. Lalti Kumar assured to return the same in 25 equal installments of Rs. 2,700/ each. For ensuring the payment Sh. Lalit Kumar issued 25 post dated cheques bearing no. 261426 to 261450 drawn on Syndicate Bank, Hotel Janpath, New Delhi with the assurance that said cheques would be encashed on their presentation in the bank. The cheque given by the plaintiff was encashed by Sh. Lalit Kumar. Plaintiff presented first cheque on 06.02.2002. said cheque was encashed. Sh. Lalit Kumar expired on 01.03.2002. the plaintiff presented second cheque of Sh. Lalit Kumar which was encashed.
3. Defendant no.1 is the wife of Sh. Lalit Kumar and defendant no.2 is son. It is stated in the plaint that after death of Sh. Lalit Kumar defendant no.1 approached the plaintiff and requested not to present remaining cheques for encashment and promised to pay the loan amount after getting the provident fund of her husband in lump sum. Therefore plaintiff did not presented cheques dated 4.4.02, 4.5.02 and 4,6,02. Lter plaintiff presented some cheques which were dishonoured with endorsements 'insufficient funds'.
4. Plaintiff has stated that defendants have received all the benefits from the concerned department on account of death but did not approached the plaintiff for payment of balance amount. Plaintiff had to pay the installments of loan taken from ICICI bank. After persuasion defendant no.1 agreed to pay the balance amount to the plaintiff before February 2003. however defendants did not paid the amount despite repeated requests and demands. It is stated that defendants are legal heirs of Sh. Lalit Kumar and after his death all the financial benefits are taken by them. Therefore they are liable to pay the liabilities of deceased. Finding no other way Suit No.840/06 2 plaintiff issued legal notice dated 7.3.03 by registered post, A.D. And U.P.C through his counsel requesting the defendants to refund the loan amount of Rs. 56,600/ with interest @ 12% per annum. The notice was duly served but defendants did not bother to reply the same. On these grounds plaintiff filed suit under order 37 C.P.C for recovery of Rs. 81,218/ alongwith pendentelite and future interest @ 12% per annum.
5. On summons for appearance defendants filed their appearance. On summons for judgment defendants filed leave to defend and same was allowed on the ground that the defendant were not signatories of cheque. Thereafter defendant filed their written statement.
6. In written statement defendants objected the suit on the ground that suit is not maintainable being filed on false, frivolous and concocted facts. There is no cause of action as defendants were not party to alleged loan and Sh. Lalit Kumar never bought any plot during alleged period and he has not left any estate and he never took any loan from plaintiff. Suit was also objected on the ground of minority of defendant no.2 as not filed under specific provision of law. Other objections as to court fee, proper verification, limitation and jurisdiction are also taken. It is also objected on the ground that plaintiff has not filed any document in support of loan transaction. It is also stated that name of defendant no. 1 is Bharti Kaushik and not Bharti Devi.
7. On merits defendants denied the fact6 of relation and plaintiff and Sh. Lalit Kumar and the transactions. It is stated that defendants do not know the plaintiff and they came to know the plaintiff ,only after receiving Summons in this case. Defendants also denied any transaction of loan and issuing of post dated cheques or Sh. Lalit Kumar was in need of money for purchasing residential plot. There is specific denial to each and every averments of plaint. It is stated that Sh. Lalit Suit No.840/06 3 Kumar never purchased any plot in the locality during alleged period. It is also stated that Sh. Lalit Kumar had a saving Bank Account No. 5681 and had a cheque book for the same bearing no.s from 256101 to 256110. from these 7 cheques were used and the remaining three are lying blank. It is stated that plaintiff has illegally arranged the cheques and forged the signatures of late husband of defendant no.1 and got some cheques illegally encashed. Defendants denied the allegation of settlement and the facts that defendant no. 1 approached plaintiff for not presenting the cheque or any promised to cleared the debts of Late Sh. Lalit Kumar. Defendants have also denied the fact of notice by plaintiff. It is stated that the story of friendly loan is a bunch of lies. The alleged assurance to return the loan in equal installment of Rs. 2700/ is false. It is also stated that plaintiff has not disclosed that he has a license to advance loan. In all, defendants made specific denial of each and every para of plaint.
8. In replication to the written statement plaintiff denied the objections being false and wrong and reiterated the plaint.
9. On the basis of pleadings of both the parties following issues were framed:
1.Whether the plaintiff is entitled for the recovery of Rs. 81,218/ as prayed in prayer clause? OPP.
2.Whether the plaintiff is entitled for any interest? If so, at what rate and for what period? OPP.
3.Relief.
10. To prove his case plaintiff appeared as Pw1 and filed his affidavit Ex.P1. The contents of affidavit are reproduction of facts mentioned in plaint. Alongwith affidavit plaintiff produced 30 documents and exhibited them as Ex. Pw1/1 to Ex.Pw1/30. Plaintiff also summoned witness from bank of plaintiff with record of his bank statement and from Syndicate Bank with statement of SB account of Sh. Lalit Suit No.840/06 4 Kumar. Pw1 was cross examined by the counsel for defendant. The statement of account filed by Pw2 was objected by counsel for defendant on the ground that the statement of account is not certified as per Bankers Book Evidence Act. Defendants did not cross examined Pw3 and never appeared to lead evidence in defense.
11. Arguments were submitted by counsel for plaintiff only and no one appeared on behalf of defendant to address final arguments. After hearing arguments and perusing the record my finding on each issues are as under;
12. ISSUE No.1: whether the plaintiff is entitled to recovery of Rs. 81,218/ as prayed? Ld. Counsel for plaintiff submitted that Late Sh. Lalit Kumar who is husband of defendant no.1 and father of defendant no. 2 took friendly loan that is proved by plaintiff by producing the bank statements of Sh. Lalit kumar as well as his own which shows corresponding entries for cheque clearance of Rs. 65,000/. He also submitted that plaintiff also proved the cheques of Sh. Lalit which were given post dated for refund of loan. Out of them two cheques were cleared. Ld. Counsel also stated that defendants are legal heirs of Late Sh. Lalit Kumar and they have received all the benefits of late Sh. Lalit Kumar. Hence they are liable to make payment of loan taken by Sh. Lalit Kumar.
13. The case is not that simple. The suit was filed under order 37 for recovery on the basis of 23 cheques out of which some were dishonoured and rest were not presented for payment. It is the case of plaintiff that Sh Lalit Kumar died on 01.03.2002. Plaintiff is having cheques of Sh. Lalit Kumar from December 2001. Plaintiff has filed theses cheques in evidence as Ex. Pw1/8 to 27. in the plaint itself plaintiff states that he presented second cheque after death of Sh. Lalit Kumar and that he got encashed. Here is a serious problem. Plaintiff has filed this suit under order 37 CPC on the basis of 23 cheques which were alleged to be issued by Sh. Suit No.840/06 5 Lalit Kumar.
14. In Sh. Vijay Singh & Ors vs Smt. Manali Malik & Ors Decided on 5 May, 2009 Honble High Court of Delhi in IA No. 6459/2008 in CS (OS) No. 930/2007 analyzed this kind of situation and discussed the whole law of negotiable instrument act. The relevant paras are:
10. The relevant provisions of the Negotiable Instruments Act relating to a cheque have been perused. Section 6 defines the cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.
Normally cheques are issued on the banks holding the monies of the drawer of the cheque. The bank is in the position of the debtor of the drawer of the cheque. The cheque is thus an order of the drawer thereof as creditor, to the bank who is his debtor, to pay to the payee of the cheque on the date of presentment the amount thereof. The IA No.6459/2008 in CS(OS) No.930/2007 Page 7 of 14 relationship between the drawer of the cheque and his banker is contractual.
11. Under Section 31, the liability of the bank as drawee of the cheque is, subject to having sufficient funds of the drawer in its hands properly applicable to the payment of such cheque, to pay the cheque when duly required so to do. It is only when the bank defaults in such payment that it becomes personally liable to compensate the drawer for any loss or damage caused by such default. Else, bank as a drawee of the cheque is not liable personally for default in payment thereof. The text book on the Negotiable Instruments Act by Bhashyam & Adiga (17th Edition) under Section 31 thereof states that at the instant of the death Suit No.840/06 6 of the drawer, the title to the balance vests in his legal representative and his own order is not competent to withdraw any part of that which is no longer his property. It is further stated that on death of a customer, the order of the customer comes to an end and only if the banker pays the cheque before notice of death, is it valid. It would thus appear that the death of customer terminates his authority to order payment and operates as a countermand of the outstanding cheque.
12. Section 30 also requires due notice of dishonour to be given to the drawer of the cheque for maintaining a claim for compensation on account of dishonour of the cheque. Thus, the dishonour of the cheque is actionable under Order 37 of the CPC only if notice of dishonour has been given to the drawer. If the drawer is dead on the date of dishonour or even on the date of presentment, no notice can possibly be given to him. That also leads to the inevitable IA No.6459/2008 in CS(OS) No.930/2007 Page 8 of 14 conclusion that in such a eventuality no suit under Order 37 of the CPC is maintainable on the basis of a cheque.
13. It is to be noted that the drawing of a cheque does not by itself operate as an assignment of the monies in the hands of the banker in favour of the payee. The holder of a cheque has no right to enforce payment from the bank unless the banker has contracted with the holder to honour. The banker is only liable to the order of the drawer and thus if there is no order of the drawer on the banker, on the date of the presentment owing to the death of the drawer, the bank is not liable to pay. Section 57 provides that the legal representatives of a deceased person Suit No.840/06 7 cannot negotiate by delivery only a cheque payable to order and endorsed by the deceased but not delivered. This is on the ground that the legal representative is not the agent of deceased. Upon demise, the estate including the amounts with the bank vest in the legal representatives or nominee and it requires a fresh act on the part of the legal representative or nominee to transfer the money, if any. Only if the cheque had been signed by the legal representative, at the instance of holder thereof does the legal representative becomes personally liable thereunder, under Section 29 of the Act.
14. Sir Ernest Pollock M.R. speaking for the court of Appeal in Re Swinburne; Sutton Vs. Featherley 1926 (134) Law Times 121 held that a cheque is clearly not an assignment of money in the hands of a banker; Lord Romilly in Hewitt Vs. Kaye L. Reports 6 E.Q. 198 was quoted :
"A cheque is nothing more than an order to obtain a certain sum of money, and it makes no difference whether the money is at the banker or anywhere else. It is an order to deliver the money and if the order is not acted IA No.6459/2008 in CS(OS) No.930/2007 Page 9 of 14 upon in the lifetime of the person who gives it, it is worth nothing." It was further held that it is merely a mandate or authority in the hands of the holder of the cheque to go to the bank and get the money from it. Warington L.J. in the same judgment held that a cheque is nothing more than an order directed to the person who has the custody of the money, requiring him to pay so much to the person in whose favour the cheque is drawn.
15. The House of Lords in London Joint Stock Bank Limited Vs. Suit No.840/06 8 Mac. Millan Arthur 1918 LR (HL) 777 speaking through Lord Finlay L.C. so described the relationship between the banker and the customer: "The relation between banker and customer is that of debtor and creditor, with a super added obligation on the part of the banker to honour the customers' cheques if the account is in credit. A cheque drawn by a customer is in point of law a mandate to the banker to pay the amount according to the tenor of the cheque." The said mandate, on demise of customer, ceases to be a mandate. On the moment of demise of customer, the bank, in terms of its contract, is holding the money not to the order of the deceased customer, but to the order of his nominees or legal representatives. The bank cannot thus act on the order of the deceased customer. The cheque, which has been held to be merely an order, thus, on demise of drawer, ceases to be a cheque
16. Closer home, in Canara Bank Vs. Canara Sales Corporation MANU/SC/0904/1987 it has been held that a cheque on which the signatures of the account holder are forged is not IA No.6459/2008 in CS(OS) No.930/2007 Page 10 of 14 cheque in as much as it is no order/mandate of the drawer to the banker to pay the money. To the same effect is Bihta Cooperative Development Cane Marketing Union Ltd. and Anr. v. The Bank of Bihar AIR 1967 SC 389.
17. I, therefore, reach a conclusion that the cheques on the basis of which the present suit has been filed, since not presented for payment in the lifetime of the drawer, ceased to be a cheque on the demise of the drawer in as much as they ceased to be the order of a person entitled to make an order to Suit No.840/06 9 the bank to pay the money thereupon and thus the suit under order 37 of the CPC would not be maintainable on the same.
15. Although, in this judgment Hon'ble High Court was dealing with an application for leave to defend, but it is laid that a cheque ceases to be a cheque on the demise of the drawer as it ceases to be the order of a person entitled to make an order to bank to pay the money thereupon. The suit under order 37, thus not maintainable on such cheque. In the above judgment it is also held that "The said mandate, on demise of customer, ceases to be a mandate. On the moment of demise of customer, the bank, in terms of its contract, is holding the money not to the order of the deceased customer, but to the order of his nominees or legal representatives. The bank cannot thus act on the order of the deceased customer. The cheque, which has been held to be merely an order, thus, on demise of drawer, ceases to be a cheque". Therefore, no money can be withdrawn form the account of deceased except under the order of legal representative or nominees.
16. In the present case plaintiff claims to be a colleague of Sh. Lalit kumar. He states that Sh. Lalit Kumar died on 01.03.2002. The fact of death of Sh. Lalit Kumar was in the knowledge of plaintiff. Despite that knowledge, plaintiff presented cheque of Sh. Lalit kumar in the bank. Not only this, he got it encashed in his account on 16.03.2002. This fact is mentioned in the plaint and the same is evident from the copy of pass book Ex.Pw1/1 of the plaintiff. Plaintiff had no right to get the cheque encashed. Although he was holding cheques of Sh. Lalit Kumar, but, for the fact that plaintiff had knowledge of death of Sh. Lalit Kumar he should not have presented the cheque for encashment. By doing this and by getting the cheque encashed plaintiff has committed the crime of criminal misappropriation of property as after the death of account holder only nominee and legal heirs have the right on the money of deceased. Plaintiff did not stopped at this, he again filed three Suit No.840/06 10 cheques on different dates as pleaded by the plaintiff himself. Those cheques were returned unpaid for insufficient balance.
17. In para 11 of the plaint, plaintiff has stated that " the cause of action for filing the instant suit firstly arose on 22.12.2001 when the plaintiff issued the cheque dated 22.12.2001 bearing no. 953587 in favour of Sh. Lalit Kumar, Husband of defendant no. 1 and father of defendant no.2 and it further arose in the month of April 2002 when the defendant no. 1 assure the plaintiff to return the balance amount of friendly loan taken by the husband and thereafter refused to return the same, the cause of cation further arose on 07.03.03 when legal notice was sent to defendant no.1 and the same still subsists since the defendants have not refunded the said balance loan amount till date".
18. Defendants have specifically denied this para. To the facts mentioned in para and to relevant paras containing facts relating to cause of action there is specific denial. To prove his case, in evidence plaintiff has stated the facts mentioned in plaint on oath. However, in his cross examination specific questions as to friendship were put. Plaintiff has admitted in those questions that plaintiff never use to take lunch with Sh. Lalit kumar never, no instance of attending any marriage together, never visited the house of Sh. Lalit kumar, no interaction with family of Sh. Lalit Kumar, not joined the 13th day (Tehranin) ceremony, etc. The purpose of loan was to purchase a plot however plaintiff has no information regarding any such plot. This fact specifically denied by the defendant and stated that Sh. Lalit Kumar never purchased any plot. Further, plaintiff stated in his cross examination that defendant no.1 never approached him and never told him about the clearing of his dues. The explanation is given that father of defendant no. 1 requested on behalf of defendant no.1.
19. Plaintiff says that to give financial assistance he himself applied for loan of Suit No.840/06 11 Rs. 1,15305/ and out of this amount he paid loan of Rs. 65000/ to Sh. Lalit Kumar by way of cheque. To prove this fact plaintiff produced his Bank pass book where a debit entry of Rs. 65,000/ appears, on 26.12.01 by way of clearing of Cheque no. 953587. to corroborate this he also summoned the bank statement of Sh. Lalit Kumar A/c number 5681 which shows that on 26.12.2001 there is a credit of Rs. 65,000/ by way of clearing. This statement is Ex. Pw3/1. From the fact that plaintiff and Late Sh. Lalit Kumar were working in same. office, debit entry for Rs.65,00/ in ExPw1/1 and credit of Rs. 65000/ in Ex.Pw3/1shows that there was transfer of fund between plaintiff and Sh. Lalit Kumar. But it does not show that plaintiff gave this money as loan. However, plaintiff has also produced the a cheque book of Sh. Lalit Kumar which contains 23 cheques of Rs. 2700/. Plaintiff has also proved that he encashed two cheques of Rs.2700/ from the account of Sh. Lalit Kumar. These cheques may not be relevant for suit under order 37 CPC, but these cheque shows that Sh. Lalit Kumar was indebted to plaintiff. Hence the plaintiff has satisfactorily prove that he gave loan of Rs. 65,000/ to Sh. Lalit Kumar.
20. However, this is not a case against the original borrower. Plaintiff has filed this case against wife and son of borrower. The son of borrower, defendant no.2, is a minor and he has been impleaded in his name through his mother as a natural guardian and next friend. Mother is defendant no.1. The summons of the case were served upon defendant no.1. The written statement is joint. However, at the stage of plaintiff's evidence counsel for defendants stopped appearing. This was the reason Pw3 was discharged without. Pw3/1 is the vital document to establish the transaction between plaintiff and Sh. Lalit Kumar. Defendant no. could chose for herself not to represent in the case. But under order 32 CPC the interest of minor cannot go unrepresented. There is no representation on behalf of minor form 01.07.2009. Pw3 was examined and discharged on 12.08.2010. plaintiff did not Suit No.840/06 12 applied for appointment or substitution of next friend. In these circumstances, as against defendant no.2, the suit fails. However, defendant no.1 was major and she herself chose not to defend her case.
21. In these circumstances the issue is decided in favour of plaintiff and it is held that plaintiff is entitled to recovery form defendant no.1 only. The amount will be calculated with the issue of interest.
22. Issue no.2: Interest. The plaintiff has claimed the interest @12% per annum. In the plaint it is stated that plaintiff gave loan of Rs. 65,000/ to be returned in 25 equal installment of Rs, 2700/. That means plaintiff advanced the loan to defendant for 2 years and 1 month. The aggregate of 25 installment comes to (25 multiplied by 2700) 67,500/. that means plaintiff 'advanced loan with interest of 2% per annum approx. That was the agreed rate of interest between plaintiff and Sh. Lalit Kumar. Plaintiff cannot claim more than what was agreed with the deceased. The issue is therefore decided in favour of plaintiff and against defendant no.1 and it is held that plaintiff shall be entitled to interest @ 2% on Rs. 59,600 (650002700 2700) from 04.04.2002 till decision.
23. RELIEF: From the discussion above held the suit of plaintiff is decreed, against defendant no.1 only, for a sum of Rs. 59,600/ along with simple interest @ 2% Per annum, from 04.04.2002 till date of decision.
Announced in the open Court VIKRAM
On 16.08.2011 CJ02 (North)/Delhi
16.08.2011
Suit No.840/06 13
16.08.2011 Suit No.840/06
Present: None.
Vide separate judgment, suit of plaintiff is decreed against defendant no.1 only.
Decree sheet be prepared accordingly.
File be consigned to record room.
VIKRAM CJ02 (North)/Delhi 16.08.2011 Suit No.840/06 14