Delhi District Court
Mahanand vs Laxmi Kumari @ Laxmi Thakur on 30 November, 2024
IN THE COURT OF SH. SUMIT DALAL
DISTRICT JUDGE - 04
SOUTH WEST DISTRICT
DWARKA COURTS : NEW DELHI
CS DJ ADJ : 617/2021
CNR DLSW01-008531-2021
Sh. Mahanand
S/o Sh. Baij Nath Singh
R/o: H.No. 52, A-Block,
Phase - 1, Goyla Diary,
Qutub Vihar, South West,
New Delhi.
....PLAINTIFF
VERSUS
Mrs. Laxmi Kumari @ Laxmi Thakur
R/o: H.No. 7/8E, Block - E,
Street No. 11, Plot No. 73,
K.No. 15/21, Qutub Vihar Phase - I,
Najafgarh, New Delhi - 110043.
....DEFENDANT
DATE OF INSTITUTION : 14.09.2021
DATE OF ARGUMENTS : 24.10.2024
DATE OF JUDGMENT : 30.11.2024
Counsel for the Plaintiff : Sh. Siddarth Yadav
Counsel for the Defendant : Sh. Pankaj Rai
SUIT FOR RECOVERY OF RS. 14,63,801/-
WITH PENDENTE LITE AND
FUTURE INTEREST @ 18% PER ANNUM
CS DJ ADJ 617/21 Page 1 of 35
JUDGMENT
1. The Plaintiff has filed the present suit, against the Defendant, for a sum of Rs. 14,63,801 (Rupees Fourteen Lakhs Sixty Three Thousand Eight Hundred and One Only) along with pendentelite and future interest @ 6% per annum.
FACTS STATED IN THE PLAINT
2. The facts, as set out in the plaint, are summed up in brief hereinbelow:
a. The plaintiff and defendant have had a close and familiar relationship, frequently visiting each other as they reside in the same locality.
b. In July 2018, the defendant was in urgent need of funds and approached the plaintiff for a friendly loan of ₹1,00,000. The plaintiff agreed and granted the loan on 15.08.2018. To assure the plaintiff, the defendant executed a written pro- note, committing to return the loan amount upon the plaintiff's demand.
c. Subsequently, the defendant requested additional loans on various occasions, which the plaintiff provided. These transactions were also recorded in the pro-note and signed by the defendant. The loans were disbursed as follows:
- ₹1,00,000 on 15.08.2018
- ₹1,00,000 on 13.09.2018
- ₹50,000 on 18.11.2018
- ₹50,000 on 08.04.2019 CS DJ ADJ 617/21 Page 2 of 35
- ₹2,00,000 on 16.10.2019
- ₹3,00,000 on 13.03.2020
- ₹1,35,000 on 22.01.2021
- ₹30,000 on 19.02.2021
- ₹2,15,439 on 20.07.2021
- ₹2,83,362 on 15.08.2021
- Total amount loaned: ₹14,63,801.
d. At some point, the defendant proposed converting the loan amount into a committee run by him, assuring the plaintiff of the security of the funds and a time-bound repayment. The plaintiff agreed, and the loan amounts were inducted into these committees. Over time, these committees matured, but the defendant requested additional time for repayment. e. On 15.08.2021, the defendant acknowledged the total liability of ₹14,63,801 and issued a cheque bearing no. 126007 for ₹8,00,000 dated 30.07.2021, drawn on State Bank of India, Dwarka, New Delhi, to the plaintiff. The plaintiff presented this cheque to his banker, Punjab National Bank, New Delhi, but it was returned unpaid on 31.08.2021 with the remark "fund insufficient." f. Following the cheque's dishonor, the plaintiff attempted to contact the defendant, who then started avoiding the plaintiff. This behavior indicated the defendant's dishonest intentions, as he had issued a cheque without maintaining sufficient funds in the account to honor it. g. The plaintiff served a legal notice dated 06.09.2021 upon the defendant, demanding payment of the outstanding amount.CS DJ ADJ 617/21 Page 3 of 35
Despite receiving the notice, the defendant neither complied with its terms nor responded.
h. The plaintiff prays for the following reliefs:
- A decree for ₹14,63,801 with pendent lite and future interest at 18% per annum in favor of the plaintiff and against the defendant.
- Awarding the costs of the suit to the plaintiff.
- Any other or further orders deemed fit and proper by the Hon'ble Court in the interest of justice.
FACTS STATED IN THE WRITTEN STATEMENT:
3. The Defendant was duly served with the summons of the suit and entered appearance through ld. Counsel Sh. A.K.Roy on 04.10.2021 and thereafter, on 10.12.2021, a written statement was filed on her behalf. The averments, made in the written statement, are summed up in brief as follow:
a. The suit is not maintainable and should be dismissed because the transactions alleged by the plaintiff are commercial in nature. According to the defendant, the claim for interest at 18% per annum indicates a commercial loan, which should be handled under the Commercial Courts, Commercial Division, and Commercial Appellate Division of High Courts Act, 2015.
b. The defendant contends that the suit is barred under Section
4 of the Punjab Registration of Money Lenders Act, 1938, as the plaintiff is seeking to recover an amount related to a committee transaction without proper registration as a money lender.
CS DJ ADJ 617/21 Page 4 of 35c. There is no cause of action for the plaintiff to file this suit, labeling it as false, frivolous, and baseless, and therefore, it should be dismissed under Order 7 Rule 11 of the CPC. d. The plaintiff has not approached the court with clean hands, having concealed material facts. The principle that one seeking equity must do equity is invoked, suggesting the suit deserves outright rejection on this ground. e. The suit is filed with malicious intent to harass the defendant and extract money fraudulently. The defendant alleges forgery, fabrication, and manipulation of documents by the plaintiff.
f. There are contradictions in the plaintiff's case, particularly between the alleged loan transactions and the acknowledgment of these transactions on 15.08.2021. The defendant claims this inconsistency indicates the plaintiff's ill intent to harass and pressurize the defendant. g. The defendant admits to knowing the plaintiff due to their residency in the same vicinity.
h. The defendant admits to taking a friendly loan of ₹1,00,000 on 15.08.2018, which was repaid within three months. The defendant denies executing any promissory note and asserts that a writing acknowledging the loan was signed, but this was not a promissory note. A blank signed cheque was also given for security, which the plaintiff has misused. i. The defendant denies taking additional loans on various dates as alleged by the plaintiff. The defendant insists that only a single loan of ₹1,00,000 was taken and repaid. The defendant claims the details noted on 15.08.2021 relate to CS DJ ADJ 617/21 Page 5 of 35 committee amounts managed by Mr. Ravinder Kumar Pandey, not to loans from the plaintiff.
j. The defendant denies suggesting converting the loan into a committee run by the defendant and denies any involvement in such committees.
k. The defendant denies any further transactions and liability towards the plaintiff, including the issuance of cheque no.126007 for ₹8,00,000. The defendant claims the cheque was a blank signed security cheque, misused by the plaintiff. l. The defendant denies avoiding the plaintiff and having any dishonest intentions. The defendant asserts that there is no liability, hence no attempt to dispose of properties or escape liabilities.
m. The defendant denies receiving the legal notice dated 06.09.2021, challenging the plaintiff to provide proof of such service.
n. The defendant denies that the plaintiff is entitled to recover any amount, including interest at 18% per annum, from the defendant.
o. The defendant prays for the suit to be dismissed with exemplary costs, labeling the plaintiff's suit as false, frivolous, baseless, and based on concocted stories and forged documents.
FACTS STATED IN THE REPLICATION
4. The Plaintiff has filed the replication, wherein the Plaintiff has traversed the contents of the written statement of the CS DJ ADJ 617/21 Page 6 of 35 Defendant and has made the necessary denials, reiterating the contents of the plaint.
ISSUES
5. On the basis of the pleadings of the parties, the following issues were framed on 08.03.2022:
1) Whether the plaintiff is entitled for recovery of Rs. 14,63,801/- as prayed for? O.P.P.
2) Whether the plaintiff is entitled for any interest? If so, at what rate and for what period? O.P.P.
3) Whether the plaintiff has not come to the Court with clean hands and has suppressed material facts? O.P.D.
4) Whether there is no cause of action in favour of plaintiff and against the defendant? O.P.D.
5) Relief.
THE PLAINTIFF'S EVIDENCE
6. The Plaintiff has led its evidence and has examined only one witness in support of his case. The Plaintiff himself appeared as PW-1 and deposed in line with the plaint of the suit and tendered his evidence affidavit which is Ex. PW1/1 and relied upon the following documents:
S. No. Exhibit/Mark Description
1. Ex. PW1/A (OSR) Copy of pro-note/ signed document
CS DJ ADJ 617/21 Page 7 of 35
2. Ex. PW1/B (OSR) Copy of cheque bearing no.
126007 dated 30.07.2021
3. Ex. PW1/C Copy of returning memo dated
31.08.2021
4. Ex. PW1/D (colly) Copy of legal notice with postal receipts
5. Ex. PW1/E Plaint filed by the plaintiff.
Thereafter, PW-1 was cross examined by Ld. counsel for the Defendant on 07.11.2023 and 09.01.2024. Thereafter, on the statement of the Plaintiff, Plaintiff's evidence was closed on 09.01.2024.
THE DEFENDANT'S EVIDENCE
7. The Defendant has led its evidence and has examined only one witness in support of her case. The Defendant herself appeared as DW-1 and deposed in line with the pleadings in her written statement and tendered her evidence affidavit which is Ex. DW1/A.
8. Thereafter, DW-1 was cross examined by Ld. counsel for the Defendant on 09.05.2024. Thereafter, on the statement of the defendant, defendant's evidence was closed on 09.05.2024.
ARGUMENTS CS DJ ADJ 617/21 Page 8 of 35
9. In order to adjudicate upon this suit, this Court heard detailed submissions of Sh. Siddharth Yadav, Ld. counsel for the plaintiff, and Sh. Pankaj Rai, Ld. counsel for the defendant. The arguments presented by both the parties were comprehensive and covered various aspects of the case. While the specific arguments on behalf of each party are not separately detailed here, they have been thoroughly considered and addressed under the respective issues discussed in the judgment.
ISSUE WISE FINDINGS Issue No. 1 - 1) Whether the plaintiff is entitled for recovery of Rs. 14,63,801/- as prayed for? O.P.P.
10. The burden to prove this fact is on the Plaintiff. Ld. Counsel for the Plaintiff argued the following:
a. The disbursal of the loan amount of Rs. 14,63,801/- is proved by the pronote (Ex PW1/A) and the Cheque Dated 30.07.2021 (Ex. PW1/B).
b. The Defendant in her cross examination admitted her signatures and handwriting on the pro-note (Ex. PW1/A) which serves as formal acknowledgment of the amounts advanced on specific dates. The pro-note details the cumulative loan of ₹14,63,801 and explicitly mentions the defendant's promise to repay the amounts upon demand, providing clear, documented evidence of the transactions. The defendant's admitted signature on the pro-note confirms her acknowledgment of receiving these loans, substantiating CS DJ ADJ 617/21 Page 9 of 35 the plaintiff's assertion of advancing funds on multiple occasions.
c. The defendant in her cross examination has admitted her signature on the cheque for ₹8,00,000 issued by the defendant (Ex. PW1/B) which is a strong indication of her outstanding liability. Issued on 30.07.2021, this cheque reflects the defendant's acknowledgment of her debt and an attempt at partial repayment.
d. The plaintiff's testimony, along with supporting exhibits (the pro-note, the cheque, and the dishonor memo), presents a cohesive narrative that has not been materially contradicted by the defendant's evidence.
e. The defendant's claim about involvement in a committee with Mr. Ravinder Kumar Pandey is unsubstantiated and an attempt to evade repayment. The plaintiff has consistently denied any relationship with Mr. Pandey or involvement in any committee, asserting that these transactions were straightforward loans. The defendant has provided no documentation or witness testimony to support the committee theory, leaving the plaintiff's explanation of a friendly loan uncontested.
f. The plaintiff has sufficient financial means to make these advances, as evidenced by his income and the support from his wife.
g. Defendant has admitted a loan of Rs. 1,00,000/- on 15.08.2018 in her pleadings and which proves that there were financial transactions and relation between the parties.
CS DJ ADJ 617/21 Page 10 of 35h. The ld. Counsel for the plaintiff contends that, although the defendant claims to have repaid the loan, she has not produced any receipts, bank statements, or witnesses to support this assertion. Without corroborative evidence of repayment, the plaintiff's testimony and the pro-note remain unchallenged and credible. The absence of repayment documentation from the defendant strengthens the plaintiff's argument that the loan remains outstanding. i. The ld. counsel for the plaintiff points out that, despite the defendant's claims, she has not presented any contrary documentary evidence to refute the loan disbursements. Without such contrary evidence, the plaintiff's exhibits and testimony substantiate the claim that the amount was indeed advanced.
11. In rebuttal, it is argued by the ld. Counsel for the defendant that a. The defendant has only taken a loan of Rs. 1,00,000 on 15.08.2018 and the same has been returned to the plaintiff. b. The pro-note (Ex. PW1/A) lacks essential formalities, such as a revenue stamp or notarization, to be treated as a valid promissory note. This weakens its credibility as proof of multiple loans.
c. The cheque (Ex. PW1/B) was not given as part-payment but as a security measure at the time of the initial loan of ₹1,00,000. The plaintiff's own admission in cross- examination supports this. As the cheque (Ex. PW1/B) was a blank signed cheque intended only as security for the initial CS DJ ADJ 617/21 Page 11 of 35 loan, its dishonor does not imply any acknowledgment of a larger debt, but rather a misuse of the security cheque by the plaintiff.
d. The plaintiff failed to provide bank statements, withdrawal slips, or any financial records to substantiate claims of lending nearly ₹15 lakh in cash. This lack of financial documentation, especially for such substantial amounts, undermines the credibility of his claim. Friendly loans may lack formalities, but given the scale of these alleged loans, the absence of corroborating records casts serious doubt on the plaintiff's narrative.
e. The plaintiff's statements about the purpose of the cheque (Ex. PW1/B) are inconsistent. He initially claimed in his pleadings and evidence affidavit that it was part-payment for a larger loan, then admitted in his cross examination that it was provided as security for the initial ₹1,00,000 loan. This inconsistency damages the plaintiff's credibility and supports the defendant's claim that only ₹1,00,000 was ever loaned.
f. The amounts mentioned by the plaintiff in the pro-note (Ex. PW1/A) are committee contributions managed by Mr. Ravinder Kumar Pandey, not loans. The plaintiff's inability to directly refute this claim, coupled with the defendant's plausible narrative, supports this argument.
12. To substantiate his claim of disbursing a total loan of ₹14,63,801 to the defendant, the plaintiff relies on Ex. PW1/A, a CS DJ ADJ 617/21 Page 12 of 35 handwritten document purportedly signed by the defendant, and the dishonored cheque of ₹8,00,000 (Ex. PW1/B). The Court has undertaken a comprehensive examination of Ex. PW1/A to assess its evidentiary value, analyze its content, and determine whether it supports the plaintiff's claim. The copy of the pronote (Ex. PW1/A) is reproduced below:
CS DJ ADJ 617/21 Page 13 of 3513. The plaintiff has produced the original document exhibited as Ex. PW1/A. This satisfies the requirement of primary evidence under Section 62 of the Indian Evidence Act, 1872. The Court has examined the original document, which was seen and returned. Thus, Ex. PW1/A is admissible as evidence.
14. The defendant, in her cross-examination dated 09.05.2024, admitted:
a. That the document bears her signatures at Point A and in multiple other locations.
b. That the handwriting on the document is hers. c. That her signature is present on the revenue stamp affixed to the document.
15. The relevant portion of the cross examination of the Defendant dated 09.05.2024 is reproduced below:
"It is correct that Ex. PW1/A bears my signature at pt. A. It is correct that signatures from portion A1 to A1 on Ex. PW1/A are also mine. It is also correct that the document Ex. PW1/A bears my handwriting."
16. This unequivocal admission establishes the execution of the document. Therefore, the execution of Ex. PW1/A is proved as per law, without the need for independent evidence regarding handwriting or signatures. However, the mere execution of the document does not automatically establish its probative value. The CS DJ ADJ 617/21 Page 14 of 35 Court must evaluate the content of the document to determine whether it supports the plaintiff's claim. The ld. counsel for the defendant has raised the objection that Ex. PW1/A does not qualify as a promissory note.
17. A valid promissory note under Section 41 of the Negotiable Instruments Act must:
a. Be written b. Contain an unconditional promise to pay a specific amount. c. Be executed by the promiser.
18. The Court agrees with the defendant's objection that Exhibit PW1/A does not meet the legal criteria for a promissory note. The reason for the said finding of the Court is that though the document contains certain entries and signatures, it lacks an unconditional promise to pay a specific sum.
19. Consequently, Exhibit PW1/A does not attract the presumptive evidentiary value of negotiable instruments under Section 118 of the Negotiable Instruments Act. Despite not being a promissory note, Exhibit PW1/A remains admissible as ordinary documentary evidence. Its evidentiary value and weight must be determined based on its content, context, and corroboration with other evidence.
20. Exhibit PW1/A consists of three distinct components, each requiring individual scrutiny:
1Section 4. "Promissory note."--A "Promissory note" is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.CS DJ ADJ 617/21 Page 15 of 35
a. Top Statement Regarding ₹1,00,000 Loan: At the top of the document, the defendant has written:
"मैंने महानंद जी से 10000/- रु लिया जब उनको जरूरी परेगा मैं उनको दे दूंगी।"
(English translation: "I have taken ₹1,00,000 from Mahanand Ji. I will give it to him when he needs it.") This statement is followed by the defendant's signature and the date 15.08.2018. The language is clear and unambiguous, constituting an acknowledgment of borrowing ₹1,00,000. The defendant's admitted signature and handwriting further corroborate the authenticity of this acknowledgment. This component of the document strongly supports the plaintiff's claim for ₹1,00,000.
b. Tabular Entries of Subsequent Amounts: Below the acknowledgment of ₹1,00,000, the document contains a table-like format with the following columns:
- Serial Number,
- Amount in numerals,
- Date,
- Defendant's signatures.
The table has ten rows, with a cumulative total of ₹14,63,801. While the defendant's admitted signatures appear against each entry, the tabular format itself does not explicitly identify these amounts as loans. Unlike the detailed acknowledgment at the top of the document, these CS DJ ADJ 617/21 Page 16 of 35 entries lack any accompanying statement or context explaining their nature.
c. Final Statement Referring to "Committee's Money": At the bottom of the document, the following statement appears in the defendant's handwriting:
"चौदह लाख 63 हज़ार 801 कमेटी का पैसा।"
(English translation: "₹14,63,801 committee's money.") This statement directly describes the cumulative amount as "committee's money" rather than loans. The term "committee's money" introduces ambiguity and aligns with the defendant's narrative that the entries relate to a committee arrangement rather than loans. While the plaintiff disputes this interpretation, the statement's explicit wording raises significant doubt about whether the amounts recorded were loans.
21. Both the parties have given their contrary contentions regarding the 'Committee's money' written on the document Ex. PW1/A. The claim of the Plaintiff is as follows:
a. That after the initial loan of ₹1,00,000, the subsequent loans disbursed to the defendant were recorded in the table format on Exhibit Ex. PW1/A. b. That the reference to "committee's money" at the bottom of the document arose because the defendant later suggested CS DJ ADJ 617/21 Page 17 of 35 converting the total outstanding loan into a committee investment in a committee run by the Defendant.
22. On the other hand, the defendant denies taking any loans beyond ₹1,00,000 and asserts:
a. That Ex PW1/A records the plaintiff's contributions to a committee run by one Mr. Ravinder Kumar Pandey, in which both the plaintiff and defendant participated. b. That the plaintiff requested the defendant to record the details of these contributions due to disputes with Mr. Ravinder Kumar Pandey.
23. After a thorough scrutiny of Ex PW1/A, this Court finds that while the document unequivocally establishes the disbursal of ₹1,00,000 as a loan, it does not satisfactorily prove the disbursal of the remaining claimed amount of ₹14,63,801. The reasoning is as follows:
a. Clear Admission of ₹1,00,000 Loan The top portion of Ex. PW1/A contains an explicit acknowledgment written in the defendant's handwriting, stating:
"मैंने महानंद जी से 100000/- रु लिया जब उनको जरूरी परेगा मैं उनको दे दूंगी।"
(English translation: "I have taken ₹1,00,000 from Mahanand Ji. I will give it to him when he needs it.") CS DJ ADJ 617/21 Page 18 of 35 This acknowledgment is accompanied by the defendant's admitted signature and date (15.08.2018). The language is clear and specific, leaving no room for doubt about the defendant's receipt of ₹1,00,000 as a loan. The defendant herself has admitted in cross-examination that the handwriting and signature on this portion of Ex. PW1/A are hers, further solidifying the authenticity of this statement. Last but not the least, the Defendant has admitted the loan disbursal of Rs. 1,00,000/- in her written statement as well.
b. Ambiguity in Subsequent Entries Below the acknowledgment of ₹1,00,000, Ex. PW1/A contains a table-like format with columns listing amounts, dates, and signatures. These entries cumulatively total ₹14,63,801, the amount claimed by the plaintiff. However, these subsequent entries differ significantly from the top acknowledgment. The differences are as follows:
1. Absence of Explicit Language of Loan: Unlike the ₹1,00,000 loan, these entries lack any accompanying language explicitly identifying them as loans. There is no acknowledgment or statement from the defendant affirming that these amounts were borrowed or received as loans.
2. Tabular Format Raises Doubts: The tabular format and the nature of the entries suggest a mechanical recording of figures rather than a detailed acknowledgment of liabilities. The plaintiff, who CS DJ ADJ 617/21 Page 19 of 35 displayed prudence in obtaining a detailed acknowledgment for the ₹1,00,000 loan, has not explained why subsequent loans, allegedly much larger, were not similarly documented with explicit terms.
c. Lack of Corroborative Evidence Neither party has brought corroborative evidence to substantiate their respective claims, which leaves the Court with unresolved doubts. The plaintiff could have strengthened his case by presenting witnesses, such as participants in the alleged committee run by the defendant or independent financial records evidencing the disbursal of the claimed amounts. The absence of such evidence weakens the plaintiff's assertion that these amounts were loans. Similarly, the defendant could have corroborated her narrative by producing witnesses or documentation related to the alleged committee managed by one Ravinder Kumar Pandey. Independent testimony from other participants could have supported her claim that these amounts were not loans. Without corroborative evidence, the Court must evaluate the document solely based on its content and context.
d. Inference from Prudence in Documentation The plaintiff's claim is further undermined by the inconsistency in documentation. For the initial ₹1,00,000 loan, the plaintiff ensured a detailed acknowledgment with clear terms. It is improbable that the plaintiff, who was CS DJ ADJ 617/21 Page 20 of 35 cautious enough to document a relatively smaller loan, would not adopt similar precautions for subsequent loans amounting to over ₹13,00,000. This lack of consistency raises questions about the plaintiff's claim that the tabular entries represent loan transactions.
24. The explicit acknowledgment at the top of Ex. PW1/A, coupled with the defendant's admitted signature, convincingly proves the disbursal of ₹1,00,000 as a loan. The tabular entries lack explicit acknowledgment, and the reference to "committee's money" at the bottom introduces significant ambiguity. The absence of corroborative evidence from either party further prevents the Court from reaching a conclusive finding that these amounts were loans.
25. Thus, Ex. PW1/A establishes the ₹1,00,000 loan but does not satisfactorily prove the plaintiff's claim regarding the additional amounts. The document's probative value is thus limited to the ₹1,00,000 explicitly acknowledged by the defendant.
26. The Court, therefore, concludes that while Ex. PW1/A proves the disbursal of ₹1,00,000, it fails to establish the disbursal of ₹14,63,801 as loans.
27. Now, turning to the dishonored cheque dated 30.07.2021 (Ex. PW1/B), the Court must examine its significance in the context of the plaintiff's claim and the defenses raised by the defendant.
CS DJ ADJ 617/21 Page 21 of 3528. The learned counsel for the plaintiff contends that the defendant issued the cheque (Ex. PW1/B) of Rs. 8,00,000/- to the plaintiff as part payment towards the outstanding loan amount of ₹14,63,801/-. It is submitted that the cheque was presented for encashment but was dishonored due to insufficient funds in the defendant's account. The ld. counsel for the plaintiff argues that this dishonored cheque serves as concrete evidence of the defendant's acknowledgment of her debt and her liability to repay the loan amount.
29. On the other hand, the defense put forth by the defendant is that while she did hand over the cheque (Ex. PW1/B) to the plaintiff, it was a blank signed cheque provided solely as security for a loan of ₹1,00,000/-. The defendant claims that:
a. The plaintiff himself filled in the amount of ₹8,00,000/- on the cheque without her authorization, intending to defraud both her and the Court.
b. She has already repaid the loan amount of ₹1,00,000/- to the plaintiff.
c. Despite repaying the loan, the plaintiff did not return the blank signed cheque to her.
30. The defendant has made clear admissions in her cross examination dated 09.05.2024, which are crucial to this case:
a. Issuance of the Cheque: She admits that the cheque (Ex PW1/B) was handed over by her to the plaintiff. b. Signature on the Cheque: She acknowledges her signature at Point A on the cheque (Ex PW1/B).CS DJ ADJ 617/21 Page 22 of 35
31. The relevant portion of her cross-examination dated 09.05.2024 is as follows:
"It is correct that Exhibit PW1/B was handed over by me to the plaintiff and the same bears my signature at Point A. Voluntarily, I had taken a sum of ₹1,00,000/- from the plaintiff, and in lieu of the same, the plaintiff had obtained a blank signed cheque from me. The rest of the payments were of committee amounts. It is wrong to suggest that I had given a cheque for an amount of ₹8,00,000/- to the plaintiff. It is further wrong to suggest that the writing on cheque Exhibit PW1/B is mine. I had taken an amount of ₹1,00,000/- in cash in the year 2018 and had repaid the same within 2-3 months. I had given the cheque Exhibit PW1/B to the plaintiff in the month of August 2018 at the time of taking the loan from him. The plaintiff had not returned the cheque despite my demand, and he had assured me to return the same; however, he had not returned the cheque."
32. Under Section 118 of the Negotiable Instruments Act, 1881 (hereinafter referred to as the "NIA"), a statutory presumption arises that every negotiable instrument is drawn for consideration until the contrary is proved. Specifically, Section 118(a) states:
"Until the contrary is proved, the following presumptions shall be made:CS DJ ADJ 617/21 Page 23 of 35
(a) of consideration--that every negotiable instrument was made or drawn for consideration, and that every such instrument, when it has been accepted, indorsed, negotiated, or transferred, was accepted, indorsed, negotiated, or transferred for consideration."
33. Therefore, in the context of the present case, the defendant in her cross examination dated 09.05.2024 has admitted to issuing and signing the cheque. Therefore, the presumption under Section 118(a) NIA applies to the present case, implying that the cheque was issued for consideration. Thus, the plaintiff is not required to prove the actual passing of consideration. The burden shifts to the defendant to rebut this presumption by proving that the cheque was not supported by consideration.
34. To discharge her burden, the learned counsel for the defendant has advanced the following arguments:
a. Plaintiff's Lack of Financial Capacity: It is argued that the plaintiff did not have the financial means to disburse a loan amount of ₹14,63,801/-. Reliance is placed on the plaintiff's and his wife's monthly earnings, as recorded during the plaintiff's cross-examination dated 07.11.2023, wherein the plaintiff admitted to limited income. The plaintiff has not produced any witnesses or documentary evidence to substantiate his financial capacity to grant such a substantial loan.CS DJ ADJ 617/21 Page 24 of 35
b. Plaintiff's Admission Regarding Timing of the Cheque: In his cross-examination dated 07.11.2023, the plaintiff deposed:
"It is correct that the cheque was taken by me from the defendant at the time of advancement of loan of ₹1,00,000/- to her."
This admission suggests that the cheque was given contemporaneously with the ₹1,00,000/- loan, supporting the defendant's claim that it was intended as security for that amount, not as part payment of ₹8,00,000/- towards the alleged larger loan.
35. In response, the learned counsel for the plaintiff contends:
a. Inadvertent Admission: The plaintiff's admission during cross-examination was inadvertent, arising from a misunderstanding of the question posed. Attention is drawn to another part of the cross-examination dated 09.01.2024, where the plaintiff denied the suggestion that he had taken the cheque from the defendant on the same day he advanced the ₹1,00,000/- loan. The relevant portion of the cross examination is reproduced below:
"It is wrong to suggest that on the day when I had advanced the amount of ₹1,00,000/- to the defendant, on the same day I had taken the cheque Exhibit PW1/B from her."CS DJ ADJ 617/21 Page 25 of 35
b. Defendant's Inaction Against Alleged Misuse: The defendant did not lodge any police complaint when the plaintiff allegedly failed to return the cheque upon her demand. She also did not inform her bank to stop payment on the cheque to prevent its misuse. These omissions are highlighted to question the credibility of the defendant's claim that the cheque was misused.
36. Upon careful consideration of the submissions and evidence, the Court observes as follows:
a. Defendant's Failure to Rebut the Presumption: The defendant's assertion that the cheque was a blank signed instrument given as security lacks corroborative evidence. There is no documentary proof of repayment of the ₹1,00,000/- loan, such as receipts or acknowledgments from the plaintiff. The defendant's mere verbal assertion is insufficient to rebut the statutory presumption under Section 118(a) NIA.
b. Conduct of the Defendant: The defendant's conduct does not align with that of a prudent person. If the cheque was genuinely misused, it would be natural for the defendant to take immediate and concrete steps to protect her interests, such as: filing a police complaint alleging misuse or fraud, issuing stop-payment instructions to her bank, sending legal notices to the plaintiff demanding the return of the cheque. The defendant admitted in her cross-examination:CS DJ ADJ 617/21 Page 26 of 35
"I had not made any complaint to the police regarding non-handing over of the cheque Exhibit PW1/B to me by the plaintiff... I had not given any information to my bank for not presenting or encashment of the cheque."
This inaction undermines the credibility of her defense.
c. Defendant's Familiarity with Financial Transactions: The defendant has admitted to participating in committees and engaging in money transfers. As a person accustomed to financial dealings, it is expected that she would be vigilant about safeguarding her financial instruments. But, her conduct in response to alleged non return of the blank cheque does not match with someone prudent engaging in financial transactions.
d. Plaintiff's Inconsistencies: During his cross-examination dated 07.11.2023, the Plaintiff made the following admission:
"It is correct that the cheque was taken by me from the Defendant at the time of advancement of loan of ₹1,00,000/- to her."
This statement suggests that the cheque was obtained contemporaneously with the initial loan of ₹1,00,000/-, which aligns with the Defendant's claim that the cheque was given as security for that loan. However, in response to a suggestion made during cross-examination dated CS DJ ADJ 617/21 Page 27 of 35 09.01.2024, the Plaintiff denied taking the cheque on the same day as advancing the ₹1,00,000/- loan:
"It is wrong to suggest that on the day when I had advanced the amount of ₹1,00,000/- to the Defendant, on the same day I had taken the cheque Exhibit PW1/B from her."
This denial indicates that the Plaintiff disputes the timing asserted by the Defendant and suggests that the cheque was not given as security for the initial loan but was issued later, possibly as part payment towards the larger loan amount. While the Plaintiff's statements regarding the timing of the cheque's issuance show some inconsistency--initially admitting that he took the cheque from the Defendant at the time of advancing the ₹1,00,000/- loan and later denying it
--this inconsistency alone does not suffice to displace the statutory presumption under Sections 118(a) of the Negotiable Instruments Act. The Plaintiff's subsequent denial mitigates the effect of his earlier admission, suggesting a possible misunderstanding during cross- examination rather than an intent to mislead. Moreover, the Defendant has failed to provide credible evidence to rebut the presumption of consideration. Her lack of action to prevent the alleged misuse of the cheque--such as not filing a police complaint or issuing a stop-payment instruction-- undermines her defense. Therefore, despite the minor inconsistency in the Plaintiff's testimony, the statutory presumption stands unrebutted.
CS DJ ADJ 617/21 Page 28 of 35e. Legal Position on Blank Signed Cheques: It is a settled legal position that when a person hands over a blank signed cheque, they confer implied authority upon the holder to fill in the necessary details. Hon'ble Delhi High Court in Mojj Engineering Systems Ltd. & Ors. v. A.B. Sugars Ltd. MANU/DE/1462/2008 : 154(2008) DLT 579, while dealing with a case where an undated cheque was presented, held that merely because the cheque was undated it does not mean that it was without consideration. It was held in the aforementioned judgment that since an undated cheque cannot be encashed it can only mean that the petitioner has authorized the complainant to enter an appropriate date on it. It was further held that when a blank cheque is signed and handed over, it means the person signing has given implied authority to the subsequent holder to fill it up. Reliance was also placed on Section 20 of the Negotiable Instruments Act, 1881. The relevant portion of the judgment reads as follows :
"7. Even otherwise, prima facie, it was the petitioners who had handed over the undated cheque for a certain amount to the respondent in terms of a contract between the parties. Since an undated cheque cannot be encashed, it can only mean that the petitioners had authorized the complainant to enter an appropriate date on it. In Young v. Grote, (1827) 4 Bing. 253, it was held that when a blank cheque is signed and handed over, it CS DJ ADJ 617/21 Page 29 of 35 means the person signing it has given an implied authority to any subsequent holder to fill it up. Similarly, in Scholfield v. Lord Londesborough, (1895-1899) All ER Rep 282, it was held that whoever signs a cheque or accepts a bill in blank, and then puts it into circulation, must necessarily intend that either the person to whom he gives it, or some future holder, shall fill up the blank which he has left.
This common law doctrine was also affirmed by Justice Macnaghten in Griffiths v. Dalton, [1940] 2 KB 264, where it was held that the drawer of an undated cheque gives a prima facie authority to fill in the date. This aspect has also been incorporated in Section 20 of the Negotiable Instruments Act, which deals with Inchoate Stamped Instruments. The Supreme Court in T. Nagappa v. Y.R. Murlidhar, MANU/SC/7523/2008 : AIR 2008 SC 2010, while discussing the scope of Section 20 held that by reason of this provision, a right has been created in the holder of the cheque. Prima facie, the holder thereof is authorized to complete the incomplete negotiable instrument. In that view of the matter, all further issues that may be raised by the petitioners regarding the nature and scope of the authority of the respondent to put any CS DJ ADJ 617/21 Page 30 of 35 particular date on the cheque in question, are all matters for trial."
Therefore, the defendant cannot escape liability merely by claiming that the cheque was blank when handed over.
37. In light of the foregoing analysis, the Court concludes that the presumption of consideration under Section 118(a) of the Negotiable Instruments Act, 1881, stands firmly in favor of the plaintiff. The defendant has failed to rebut this presumption by not providing any credible or substantive evidence to support her claim that the cheque was not issued for consideration. Her assertion that the cheque was a blank signed instrument given as security for a repaid loan of ₹1,00,000/- lacks corroboration and is undermined by her own admissions.
38. The defendant's failure to take reasonable steps to prevent the alleged misuse of the cheque further diminishes the credibility of her defense. Despite claiming that the plaintiff misused the cheque, she did not file a police complaint, issue a stop-payment instruction to her bank, or produce any documentary proof of repayment of the ₹1,00,000/- loan. Such inaction is inconsistent with the conduct expected of a prudent person under similar circumstances.
39. Moreover, the defendant's admissions regarding the issuance and signature on the cheque strengthen the plaintiff's position. She has acknowledged handing over the cheque to the plaintiff and that it bears her signature. The minor inconsistencies in the plaintiff's testimony regarding the timing of the cheque's CS DJ ADJ 617/21 Page 31 of 35 issuance do not suffice to displace the statutory presumption under Section 118(a) of the Negotiable Instruments Act, 1881, especially in the absence of any substantial evidence from the defendant.
40. Upon applying the principle of balance of probabilities, it is concluded that the Defendant is liable for an amount of ₹8,00,000/-, as evidenced by the dishonored cheque (Ex. PW1/B). While the Plaintiff has successfully established the issuance of the cheque and its correlation with a financial liability, he has failed to substantiate through cogent evidence that the Defendant's total liability amounts to ₹14,63,801/- as claimed. The presumption of consideration under Section 118 of the Negotiable Instruments Act supports the liability for ₹8,00,000/-, but the absence of additional corroborative evidence limits the Plaintiff's claim to this specific amount. Therefore, the Court holds that the defendant is liable to pay the plaintiff the sum of ₹8,00,000/-, as evidenced by the dishonored cheque (Ex PW1/B). The plaintiff has successfully proven his claim, and the defendant's defense is untenable in light of the evidence and legal presumptions applicable to this case.
41. After considering all the evidence and analysis, the Court finds that the plaintiff is entitled to recover a sum of ₹8,00,000/- from the defendant but not the entire amount of ₹14,63,801/- as prayed for. Issue No. 1 is decided accordingly.
Issue No. 2 - Whether the Plaintiff is entitled for any interest? If so, at what rate and for what period? OPP CS DJ ADJ 617/21 Page 32 of 35
42. In view of the finding given qua issue no. 1 viz. that the Plaintiff is entitled to recover the Defendant a sum of Rs. 8,00,000/-, it is clear that plaintiff is also entitled to recover interest from the Defendant for the said amount. In the plaint of this suit, the Plaintiff has sought pendetelite and future interest @ 18% per annum. In my view, the rate of interest claimed by the plaintiff is excessive and in the facts and circumstances of this case, the ends of justice will be met, if the plaintiff is granted pendete lite and future interest at the rate of 6% per annum 2. In view of the aforesaid, this issue is decided in favour of the plaintiff and against the defendant and it is held that the plaintiff shall be entitled to recover from the defendant, pendente lite and future interest at the rate of 6% per annum i.e from the date of institution of the suit till realization of the amount.
Issue No. 3 - Whether the Plaintiff has not come to the Court with clean hands and has suppressed material facts? OPD
43. The burden of proving that the Plaintiff has not approached the Court with clean hands and has suppressed material facts rests on the Defendant. However, the Defendant has not provided any substantive evidence to support this allegation. There is no documentary proof or credible testimony indicating that the 2 As per the judgment of the Hon'ble Supreme Court of India in Central Bank of India v Ravindra, AIR 2001 SC 3095, the grant of pendentelite and future interest is a subject matter of the discretion of the Court and not to be governed by the agreement between the parties. The Interest Act, 1978 contemplates the grant of interest at the rate of 6% per annum. Also, Section 34 of CPC, 1908, contemplates the grant of interest at the rate of 6% per annum. Thus, the plaintiff has been granted pendentelite and future interest at the rate of 6% per annum. As far as the interest for the period between date of loan and filing of suit is concerned, the plaintiffs fail to prove any agreement between the parties regarding the rate of interest for the said duration. In such a situation, the interest for the period between date of loan and filing of suit @ 6% per annum is considered to be appropriate by this Court.
CS DJ ADJ 617/21 Page 33 of 35Plaintiff misrepresented facts or concealed material information relevant to the case. On the contrary, the Plaintiff has produced necessary documents, such as Ex. PW1/A and Ex. PW1/B, and has been forthcoming in his testimony. In the absence of any concrete evidence from the Defendant to establish suppression of material facts by the Plaintiff, the Court finds that the Defendant has failed to discharge the burden of proof. Therefore, this issue is decided in favor of the Plaintiff and against the Defendant.
Issue No. 4 - Whether there is no cause of action in favour of the plaintiff and against the defendant? OPD
44. In addressing the issue of whether the suit is without any cause of action, this Court finds substantial grounds supporting the plaintiff's claims, thereby negating the defendants' contention. A cause of action arises when a set of facts are sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The burden to prove that there is no cause of action rests with the Defendant. The Plaintiff has established a prima facie case by providing evidence of loans given to the Defendant, including the acknowledged loan of ₹1,00,000/- in Ex PW1/A and the dishonored cheque for ₹8,00,000/- in Ex PW1/B. The Defendant has failed to present any credible evidence to negate these claims or to demonstrate that no legal grounds exist for the suit. Therefore, the Court finds that there is a valid cause of action in favor of the Plaintiff and against the Defendant. This issue is decided in favor of the Plaintiff.
CS DJ ADJ 617/21 Page 34 of 35RELIEF
45. As a net result of the aforesaid findings given qua the issues framed in this suit, the suit is decreed in favour of the plaintiff and against the defendant. It is held that the plaintiff shall be entitled to recover from the defendant:
a. Amount of RS. 8,00,000/-
b. Pendente lite and future interest @ 6% per annum from the date of institution of the suit till the realization of the amount.
c. Costs of this suit.
46. After preparation of the Decree Sheet by the Reader, the file be consigned to the record room.
ANNOUNCED IN THE OPEN COURT DATED: 30.11.2024 Digitally signed SUMIT by SUMIT DALAL DALAL 2024.12.02 Date:
15:52:04 +0530 (SUMIT DALAL) DISTRICT JUDGE - 04 DWARKA COURTS : NEW DELHI CS DJ ADJ 617/21 Page 35 of 35