Delhi District Court
The Balussery Benefit Chit Fund (P) Ltd vs ) Mr. Aleyamma Mathew on 10 January, 2019
IN THE COURT OF SHRI GAJENDER SINGH NAGAR:
ADMINISTRATIVE CIVIL JUDGE CUM ADDITIONAL RENT
CONTROLLER (CENTRAL) : DELHI
Suit No. : 257/08 (Old); 94925/16 (New)
In the matter of:
The Balussery Benefit Chit Fund (P) Ltd.,
Through its Director
Sh. T.S. Sivaramakrishnan,
1/24, Asaf Ali Road, New Delhi110002. ....Plaintiff
Versus
1) Mr. Aleyamma Mathew,
W/o Sh. Mani,
Edassery Parambil House, Mundkakkal Kavu,
Trikodithanam, P.O. Changanassery,
Kottayam Dt., Kerala.
2) Mr. Vishwanath Pillai,
98, Mohan Garden, Uttam Nagar,
New Delhi110059.
3) Mrs. Omana Shahi,
387, 2nd Floor, DDA Flats, Near Ranjit Nagar,
New Delhi.
4) Mr. Darsy Shaji,
3781/81, Regar Pura, Karol Bagh,
New Delhi.
Suit No. 94925/16
5) Mr. Aley Kutty John,
57A, DDA Flats, Pandav Nagar,
New Delhi110008.
6) Mrs. Anita John,
A224, MCD Flats, Usmanpur,
Seelampur, Shastri Park, Delhi.
.....defendants
Date of Institution : 10.04.2008
Date of order when reserved : 18.12.2018
Date of order when announced : 10.01.2019
JUDGMENT :
1 Vide this judgment undersigned shall decide a suit under Order 37 CPC for recovery of Rs.1,48,297.75p alongwith pendente lite and future interest.
2 The plaintiff is a Joint Stock Company duly registered with the Indian Companies Act with Head Office at Chennai and branches elsewhere including Delhi. The suit has been filed by Sh. T.S. Sivaramakrishnan, who is the Director and Principal Officer of the plaintiff company. He is fully authorised by virtue of the Power Attorney dated 25.07.1981 to file, institute and execute the present plaint on behalf of the plaintiff and to sign and verify the pleading of the suit.
3 The brief facts of the case narrated in the plaint are that the The plaintiff company was running the chit fund within the meaning Suit No. 94925/16 of the Madras Chit Fund Act, 1961. The plaintiff has got registered with the Registrar Chit Funds for conducting the chits. The chit fund number given by the Registrar to the series in question is F2/17/666/0506. The plaintiff has thus started the chit known as class X series 24 with 40 subscribers, total value of the chit was Rs. 2,00,000/. The chit had to run for 40 months each subscribers has to pay Rs.5,000/ p.m. The defendant no.1 was enrolled on chit subsequently and was having ticket no. 7. It is stated that certificate of commencement of the said chit was obtained from the Registrar and the date of commencement of the chit was 30.11.2005. The defendant no. 1 happened to be successful bidder at the auction held on 28.01.2006 having bid at a discount of Rs. 60,000/ thus entitled to receive the prize amount i.e. sum of Rs. 1,40,000/. As per bylaws of chit agreement and in acceptance with the provisions of the Act, the defendant no. 1 furnished security for the due payment of the future installments. The defendants no. 2 to 5 stood surety of the defendant no. 1. The defendants executed a bond/promissory note as collateral security undertaking jointly and severally to pay the sum of Rs. 1,85,000/. The defendant no. 1 paid subscription due upto and inclusive of 14 installments plus Rs. 67.25, however, thereafter committed defaults in the payment of the future installments. Thus defendants became liable to pay the subscription in respect of remaining 26 installments less Rs. 67.25 i.e. Rs. 1,48,297.75 with interest and postage at the rate of 12% p.a. as per the terms and Suit No. 94925/16 conditions of agreement and pronotes signed by defendants. It is contended that demand notice was served on the defendant in spite of service of notice no amount has been paid by the defendants. Thus the plaintiff is entitled to recover the above stated amount jointly and severally from the defendants. It is contented that bonds were executed in Delhi, further defendants are residing in Delhi, hence this court has jurisdiction.
4 Notice of the suit was issued to the parties. The defendants no. 2 and 6 appeared on service. Summons were also issued to defendant no. 3. Leave to defend application was filed on behalf of the defendants no. 3 and 5. An application under Order V rule 20 of CPC made on behalf of the plaintiff for service of the defendants no. 1,4 and 7 with substituted mode, which was allowed vide order dated 09.01.2012. Suit was decreed against the defendants no. 2 and 6 as they could not file appearance in due time, it was also observed in that order sheet that though an application under Order VI Rule 17 of CPC has been moved, however, the same has not been argued, or allowed hence, the proposed defendant no. 7 has not been impleaded as defendant in the suit. A number of opportunities were given to the plaintiff to serve the defendant no. 1 and 4 however it did not avail the same, consequently, vide order dated 19.11.2012 the suit of the plaintiff was dismissed for nonprosecution against the defendants no. 1 and 4 as plaintiff failed to take steps for summoning them. Thereafter, vide order dated 18.04.2013 leave to defend filed on behalf Suit No. 94925/16 of the defendants no. 3 and 5 which was allowed. Consequent to that the defendants no. 3 and 5 filed written statement in the matter. 5 In their written statement it was stated on behalf of the defendants no. 3 and 5 that present suit is a collusive suit between plaintiff and the defendant no. 1 with a view to fraudulently secure judgment against defendant no. 3 and 5. It is contended that the plaintiff had already taken LIC policies and other securities from defendant no. 1 and the same are lying with the plaintiff, further the said securities are sufficient to recover the amount due. It is contended that the plaintiff has purposively not taken effective steps for service of defendant no. 1 who is the principle debtor, and got the suit dismissed against him. It is contended that the defendant no. 3 and 5 had never signed any security agreement or any agreement whatsoever with the plaintiff. It is contended that the plaintiff is agitating its claims on the basis of alleged agreement as well as on the basis of alleged promissory note however, both the pleas are mutually inconsistent and destructive. It is denied if defendant no. 3 and 5 are liable to pay any amount to the plaintiff. It is further stated that the plaintiff can proceed against the defendant no. 3 and 5 only after getting a decree against defendant no. 1 (principal debtor). It is contended that the suit is barred by limitation. The same is without any cause of action and has not been signed and verified by authorized person. It is contended that alleged promissory note was for an amount of Rs. 1,85,000/. However, the amount claimed in the suit is Rs.
Suit No. 94925/161,48,297.75 which has been arrived at on the basis of unrevealed and unverified transactions between plaintiff and the defendant no. 1. 6 No replication to the written statement was filed by plaintiff.
7 Vide order dated 19.10.2015, on the basis of pleadings following issues were framed :
ISSUES (1) Whether plaintiff is entitled for decree of Rs. 1,48,297.75/ along with pendente lite and future interest @ 12% per annum as prayed for? OPP (2) Whether present suit is barred by law of limitation as prayed for? OPD (3) Whether present suit is bad for nonjoinder and misjoinder of necessary parties? OPD (4) Relief.
8 In order to support its case plaintiff examined Sh. T.S. Shivaramkrishnan Director of the plaintiff as PW1. This witness exhibited his evidentary affidavit as PW1/A, demand promissory note executed by defendants as Ex PW1/1, statement of account as Ex.PW1/2, original chit agreement as Ex. PW1/3, dispatch slip alongwith legal notice sent to defendant as Ex. PW1/4 (collectively). This witness supported the case of the plaintiff and deposed on the Suit No. 94925/16 similar lines as the facts contained in the plaint. In his cross examination it is stated by him that he is one of the five Directors of the plaintiff company. It is stated by him that there is no special meeting held for present case. It is stated that he has not filed any resolution for this particular case. This witness could not show any document to support his contention that chit agreement was duly approved by Registrar of Chit funds. It is stated by him that they had taken securities from defendant no. 1 at the time of paying the chit amount. It is also admitted that they have taken LIC policy from the defendant no. 1 as security. He could not tell the exact amount of policy. It is denied by him that the surrender value of the policy was sufficient to recover the due amount of the chit. A question was put to this witness whether they had done any direct transaction or entered into any agreement with defendant no. 3 and 5 to which he replied that they have executed a promissory note and relevant document alongwith defendant no. 1. It is clarified by him that there is surety proposal form alongwith acknowledgment for receiving a copy of by laws and copy of the agreement. It is stated by him that he has not filed the same on record however, he brought the same on record and the same was exhibited as PW1/5 (collectively). It is denied by him if any surety agreement was signed with defendant no. 3 and 5. He denied the suggestion that he has colluded with the defendant no. 1. It is denied that defendant no. 1 purposely not served. It is denied by him that they had sufficient security in the form of LIC policy to recover Suit No. 94925/16 the due amount. No other plaintiff witness was examined and plaintiff's evidence was closed.
9 To prove their defence the defendant no. 3 and 5 examined themselves as DW1 and DW2 respectively.
10 DW1 Omana Shaji deposed verbetum on the line as stated in the WS. It is stated that she is not having any knowledge qua the chit fund agreement between plaintiff and defendant no. 1. In her cross examination it is admitted by her that in the year 2008 her address was 387, 2nd floor, DDA flats, Ranjeet Nagar, Delhi as mentioned in the plaint. It is stated by her that signatures at point A on Ex. PW1/1 are like her signature. It is voluntarily stated by her that the same may be her signature however, the same are opposite to the name written at serial no. 3, Vishwanathan Pilai. It is admitted by her that defendant no. 1 was known to her. It is admitted by her that signature at point A on Ex. PW1/5 are her signature. It is admitted by her that she put the said signatures on all documents forming part of Ex. PW1/5. It is stated by her that defendant no.1 was her senior colleague in Sir Ganga Ram Hospital.
11 DW2 Ms. Aleykutty John deposed on the same line as DW1. In her cross examination it is admitted by her that in the year 2008 her address was 57A, DDA Flats, Pandav Nagar, Delhi as mentioned in the plaint. It is stated by her that signatures at point B on Ex. PW1/1 are her signature. It is admitted by her that defendant no. 1 was known to her. It is admitted by her that signature at point B on Ex.
Suit No. 94925/16PW1/5 are her signature. It is admitted by her that she put the said signatures on all documents forming part of Ex. PW1/5. 12 No other defence witness was examined and defence evidence was closed on 06.02.2017.
13 After 06.02.2017 the matter was fixed for final arguments on a number of dates however, till 18.12.2018 i.e. for almost two years arguments could not be adduced on behalf of the plaintiff. Arguments adduced on behalf of the defendant no. 3 and 5 have been heard, they filed written synopsis as well. No written arguments filed on behalf of plaintiff despite opportunities. However, on the day when the matter was fixed for judgment counsel for the petitioner appeared and filed three judgment in the Court, to support his contention that a recovery suit against surety/guarantor can be filed even without joining the principal debtor as a party. The cases are Hindustan Vidhyut Product Limited Vs. B.M. Patel, 2008 (87) DLT 348, Syndicate Bank Vs. Channa Veerappal Beleri, Laws (SC) 2006 (4) 1999 & T.D. Rajareddy and Company, Chlttoor Vs. Karur Vysya Bank, Laws (APH) 2001 (11) 140. It is further contended by him that the sureties had executed a separate contract i.e. PW1/5, hence, they can not avoid their liability. It is stated that the amount received from surrendering of LIC policy has been mentioned in the statement of account, Ex. PW1/2 as the last entry.
Suit No. 94925/1614 Entire file has been perused by the undersigned. The main argument taken on behalf of the defendant is that due to the omission on the part of the plaintiff the principal debtor i.e. defendant no. 1 has been discharged hence, the defendant no. 3 and 5 who were the sureties would also stands discharged as per section 134 of the Indian Contract Act. It is further argued that the plaintiff has not came before the court with clean hands as the plaintiff has not disclosed the surrender value of the LIC policy of the principal debtor which was got encashed by the plaintiff, as the defendant no. 3 and 5 are also entitled to be discharged to the extent of the amount of surrender value of the LIC policy as per section 141 of the Indian Contract Act. It is contended that non discloser of surrender value of LIC policy would mean that entire outstanding amount was satisfied that is why the plaintiff had not taken the steps to serve the defendant no. 1 or to clarify on record the surrender value of the LIC policy which was recovered by the plaintiff. To support his contention, Ld. Counsel for defendant relied on a number of cases titled as M/s. Kurnool Chit Funds P. Ltd. vs. Pvt. Narsimaa and others (AIR 2008 AP 38), T. Raju Setty vs. Bank of Baroda AIR 1992 Kant 108, Syndicate Bank, Tangutur Branch, Tangutur, Prakasam District vs. Pamidi Somaiah (died) AIR 2002 AP 12 and Madhya Pradesh vs. Kaluram AIR 1967 SC 1105.
15 The issuewise findings of the undersigned in the present Suit No. 94925/16 matter is as under:
ISSUE NO1: Whether plaintiff is entitled for decree of Rs. 1,48,297.75/ alongwith pendente lite and future interest @ 12% per annum as prayed for? OPP
16 The case of the plaintiff was that defendant no. 1 had become member of a chit fund. He successfully bid at the auction held on 28.01.2006 and received the prize amount that is the sum of Rs. 1,40,000/. Defendant no. 2 to 5 stood as his surety. Defendant no. 1 failed to pay 26 installments hence was liable to pay sum of Rs. 129932.97 as principal Rs. 18,365/ as interest and postage i.e. total sum of Rs. 1,48,297.75/ alongwith interest. Since defendant no. 1 could not pay this amount despite service of legal demand notice hence, the present case was filed against defendant no. 1 principal debtor and his sureties as the sureties were jointly and severally liable to the plaintiff qua that amount. By proving the documents Ex. PW1/1, Ex PW1/2. Ex. PW1/3, Ex. PW1/4 and Ex. PW1/5 the plaintiff has proved the factum of chit fund, factum of amount given to the defendant no. 1, factum of default in payment of installments made by defendant no. 1 as well as the factum of defendant no. 3 and 5 standing as sureties for defendant no. 1. It is to be noted that the defendant no. 3 and 5 also admitted their signatures on document Ex. PW1/5 whereby they agreed to pay the default amount, if any, they Suit No. 94925/16 also admitted their signatures on Ex. PW1/1 which is a promissory note.
17 However, defendant no. 3 and 5 have raised a technical defence that in the present matter suit against defendant no. 1 was dismissed for non prosecution due to omission on the part of the plaintiff i.e. non filing of the process fees despite various opportunities. In these circumstances, defendant no. 3 and 5 who were the sureties would also stand discharged in this matter, reliance being placed on section 134 of the Indian Contract Act. The same is reproduced as below :
"134 Discharge of surety by release or discharge of principal debtor of principal debtor. - The surety is discharged by any contract between the creditor and the principal debtor, by which the principal debtor is released, or by any act or omission of the creditor, the legal consequence of which is the discharge of the principal debtor."
18 Further, the judgments relied upon by the defendant interprets the provisions of section 134 Indian Contract Act as follows :
(I) In T Raju Setty vs. Bank of Baroda AIR 1992 Karnakata 108 : "39 .... We have held that even though several options are open to the creditor for recovering the debt, either proceeding against principal debtor and the sureties, in a case where the creditor chooses to proceed against the Suit No. 94925/16 principal debtor and the sureties jointly and severally and the suit abates against the principal debtor, the suit cannot be decreed against the sureties because, in respect of the same subject matter of the suit, there will be two conflicting decrees. This is the import of para 9 of the judgment of the Supreme Court in Sri Chand's case AIR 1966 SC 1427."
(II) Syndicate Bank, Tangutur Branch, Tangutur, Prakasam District vs. Padmini Somaiah : "15. In the present case also though the principal debtor did not claim the relief under the Act 7 of 1977, but due to his death the suit had abated and the debt against him stands discharged. When once the debt stands discharged against the principal Debtor, more so, as a result of an omission on the part of the creditor, I do not find that there is any case for the creditor to proceed against the surety. The liability of the surety is always to make good the loss that was caused as a result of the default of the principal Debotr and if the surety discharges the liability of the creditor he can have a right to proceed against the principal Debtor. In the present case as a result of the omission of the creditor, the surety is denied of such a right. In such a case, it would not be proper to hold that the surety is still liable for the creditor even after the discharge of the principal Debtor, as a result of the omission on the part of the creditor."
(III) Kurnool Chit Funds P. Ltd. vs. Pvt.
Narsimaa and others (AIR 2008 AP 38) : "13. A surety is a person who comes forward to pay the Suit No. 94925/16 amount in the event of the borrower failing to pay the amount, unless it is held by a competent Court through a decree that he is not liable to pay the amount due to the creditor and when he denies the liability it becomes difficult for the creditor to realize the amount. In the event of a decree in favour of the creditor against the principal borrower, the wings of the decree can also be extended against the sureties as their liability is co extensive with the principal debtor. When once there is a decree, the creditor is at liberty to proceed either against the principal borrower or sureties provided that the remedy of the surety is available for recovery of the amount against the principal debtor after payment of the amount to the creditor. But in the present case, the suit against the principal debtor is dismissed for default and the decision became final. Therefore, under law, there is no liability surviving against D1 for realization of the amount due to the creditor. When once the liability of the principal debtor is extinguished, the sureties liability gets automatically terminated. Therefore, without making the principal debtor liable for payment of the amount to the creditor, the sureties cannot be made liable for recovery of the amount."
19 From perusal of the above stated provisions of law and judgments, it is apparent that claim against the guarantor is not divisible, it is not an independent claim. It is apparent when a joint claim has been preferred against principal debtor and surety and the suit proceedings stood Suit No. 94925/16 abated qua principal debtor, the question of continuance of the suit against guarantor would not arise. In such circumstances, section 134 of Indian Contract Act would apply and surety would stand discharge. Once the suit stands abated against defendant no1/principal debtor, the result would be that the suit is dismissed qua him, if the claim is decreed against guarantors it would be a conflict between the decree of dismissal passed against principal debtor and therefore, it would lead to the court passing a decree, which has even otherwise has become final with respect to the same subject matter. (Reliance being placed on State Bank of Patiala Vs. S.K. Mathur, ILR (2011) III Delhi 160) 20 Coming to the facts of present case, it is apparent from order dated 19.11.2012, that the suit against principal debtor i.e. defendant no1, was dismissed for non prosecution i.e. dismissed for non filing of P.F., through written as dismissal, it was in fact rejection of plaint qua defendant No. 1, as per order 7 Rule 11 (f) CPC. It is to be noted that this order was not reversed in any appeal or revision. In fact, no appeal or revision from that order was ever filed. Thus, the order of dismissal/rejection of the suit for nonprosecution against principal debtor i.e. defendant Suit No. 94925/16 no1 attained finality. It is also not the case of the plaintiff that after dismissal of the present suit against defendant no 1, he filed any other recovery suit against defendant no1 within the period of limitation. Thus, plaintiff forgo all his legal remedies against defendant no1 due to his own omission, the legal consequence of which is the discharge of principal debtor. In these circumstances, Section 134 of Indian Contract Act would come into play and even the guarantors i.e. defendants no. 3 and 5 would also stand discharged from paying the liability. The judgments relied upon by the ld. Counsel for the plaintiff are of no use as in the present matter a joint claim was preferred against principal debtor and the sureties, while the judgments relied upon by him were about filing of separate claim against the surety without even joining the principal debtor. 21 Further more, the plaintiff did not came before the court with clean hands. It suppressed material facts in the plaint. It did not mention that any LIC Policy was taken from the principal debtor as security. It was also not disclosed that they have received the surrender value of the policy to recover the due amount. Though, these facts were admitted by PW1 in his crossexamination. Even in his crossexamination, PW1 did not mention the amount received by them as surrender value of that policy. It is to Suit No. 94925/16 be noted that as per Section 141 of Indian Contract Act, a surety is entitled to the benefit of every security, which the creditor has against the principal debtor at the time when the contract of surety shift, is entered into.
22 In the present case, the plaintiff has received the surrender value of the LIC Policy, which was given as security by the principal debtor. However, the plaintiff has not disclosed the amount received by it on surrender of that policy, in these circumstances, the contention of the defendants no. 3 and 5 that the said policy was sufficient to discharge the liability of the principal debtor appears to be probable. This non disclosure also support the contention of the defendants no. 3 and 5 that due to same collusion between plaintiff and defendant no. 1, the plaintiff has not taken steps as per the directions of the Court to serve principal debtor/defendant no1. The contention of Ld. Counsel for the plaintiff that the amount realized by surrendering the LIC policy is mentioned in Ex. PW1/2 is not tenable as from perusal of Ex. PW1/2 it does not appear that sum of Rs.16,875/ received on 30.07.2007 was received from surrender of the LIC policy or was directly deposited by the principal debtor.
23 In view of the above stated discussion it is, hereby, held that plaintiff is not entitled to a decree of Rs.
Suit No. 94925/161,48,297.75 alongwith pendente lite and future interest @ 12% against defendants no. 3 and 5. Thus, the issue is decided against plaintiff and in favour of defendants no. 3 and 5.
ISSUE NO 2: Whether present suit is barred by law of limitation as prayed for? OPD 24 In its plaint, the plaintiff has clarified that defendant no1 was a member of the chit fund. He became successful bidder at the auction held on 28.01.2006, thus, the money was paid to defendant no1 on 28.01.2006 or on 21.02.2006 when the promissory note and bond were executed. Even after becoming successful bidder, the defendant no1 paid installments till October 2006 and made last payment on 30.07.2007 as apparent from statement of account filed by the plaintiff. Thereafter, no payment was made by him. The present suit for recovery of amount was filed on 09.04.2008. Thus, the suit was within limitation even if the period would be calculated from 28.01.2006. Thus, this issue is decided in favour of plaintiff and against the defendants no. 3 and 5.
ISSUE NO. 3: Whether present suit is bad for nonjoinder and misjoinder of necessary parties? OPD Suit No. 94925/16 25 It was the responsibility of the defendants no. 3 and 5 to prove this mixed question of fact and law, however, no evidence has been lead by them to show which necessary party had not been joined or which of the respondent had been misjoined in the matter. It is to be noted that defendants no. 3 and 5 stood sureties for defendant no1, hence, they were necessary and proper parties in the present matter. Thus, this issue is decided in favour of plaintiff and against the defendants no. 3 and 5.
ISSUE NO. 4: Relief.
26 In view of the findings recorded on issue no.1, no relief can be granted to petitioner. The suit of the plaintiff is hereby dismissed. Parties to bear their own costs. Decreesheet be drawn accordingly.
File be consigned to Record Room. GAJENDER Digitally signed
by GAJENDER
SINGH NAGAR
SINGH Date:
NAGAR 2019.01.10
23:19:52 +0530
Announced in the open court (GAJENDER SINGH NAGAR)
on 10.01.2019 Administrative Civil Judge cum
Additional Rent Controller (Central)
Delhi/10.01.2019
(This judgment contains 19 pages in total)
Suit No. 94925/16
CS94925/16
10.01.2019
Present : Sh. S.N. Khanna, Ld. Counsel for the plaintiff.
None for the defendant.
It is requested by the Ld. Counsel for the plaintiff that his mother is ill due to which he could not file written arguments on 05.01.2019 as per the directions of the Court, however, he wish to file three judgments and want to adduce very brief arguments on behalf of the plaintiff.
In the interest of Justice, judgments taken on record.
Brief arguments heard.
Put up the matter for judgment at 4:00 p.m. (Gajender Singh Nagar) ACJ/ARC (Central) Delhi/10.01.2019 Suit No. 94925/16 :2: At 4:00 p.m. Present : None.
Vide separate judgment of even date, the suit of the plaintiff is hereby dismissed. Parties to bear their own costs. Decreesheet be drawn accordingly.
File be consigned to Record Room.
(Gajender Singh Nagar) ACJ/ARC (Central) Delhi/10.01.2019 Suit No. 94925/16