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2013 DIGILAW 334 (CAL)

Dinesh Ranchhoddas Kapadia v. Manoj S. Kasliwal

2013-06-11

SOUMEN SEN

body2013
JUDGMENT : Soumen Sen, J. 1. The plaintiff has instituted this suit for recovery of money lent and advanced. 2. In the plaint, the plaintiff makes out a case that in the early part of 1993 the defendant approached the plaintiff for loan to meet certain urgent requirements following which the plaintiff had agreed to give such loan and the defendant had agreed to accept such loan on certain terms and conditions which, inter-alia, includes as follows:- "(a) The plaintiff would pay Rs. 25,51,000/- by way of accommodation loan to the defendant; (b) The defendant would refund the said amount being interest @ 24% per annum within 90 (ninety) days thereof or on demand by the plaintiff for repayment of the said amount;" 3. Such agreement was entered into or arrived at between the parties at the plaintiff's office at 64/65, Stephen House, 4, B.B.D. Bag (East), Calcutta-700001. In terms of the said agreement the plaintiff advanced a sum of Rs. 25,51,000/- to the defendant by way of a loan by a demand draft no.HSBC/1 140586 dated 12th March, 1993 drawn on State Bank of Saurastra, Calcutta. The defendant duly accepted such payment and enchased the said demand draft. In spite of repeated demands and reminders, the defendant, however, had failed and/or neglected to pay the aforesaid amount or any portion thereof along with agreed interest. The plaintiff issued a legal notice on 2nd of November, 1995 through his Advocate calling back the said loan along with the interest at the rate of 24% per annum. The said notice was duly received and acknowledged by the defendant. The said notice was duly replied on behalf of the defendant by his advocate by a letter dated 20th November, 1995, denying liability. The said letter of the defendant was duly replied by the learned Advocate on behalf of the plaintiff by a letter dated 20th December, 1995 reiterating the demand. Since in spite of such notice the defendant had failed and neglected to pay the aforesaid loan amount, the present suit was instituted on 11th of March, 1996. 4. The defendant duly contested the said claim of the plaintiff by filing written statement. In the written statement, the defendant contended that such amount was paid by way of an earnest money in respect of an oral agreement for sale concerning about 200 acres of land at Diwas. 4. The defendant duly contested the said claim of the plaintiff by filing written statement. In the written statement, the defendant contended that such amount was paid by way of an earnest money in respect of an oral agreement for sale concerning about 200 acres of land at Diwas. The defendant contended that the plaintiff, on an earlier occasion, issued two several cheques being Cheque Nos.657083 and 657084 for Rs. 20 lakhs and Rs. 5,51,000/- both dated February 18, 1993 respectively but such cheques were dishonoured on presentation. This fact was suppressed in the plaint. Thereafter the said bank draft was issued as part consideration towards the said oral agreement for sale. The defendant contended that none of the letters annexed to the plaint was ever received and/or served upon the defendant and the defendant had never authorised or instructed Mr. J.W. Mahajon to write a letter dated November 20, 1995 or to make any communication with the plaintiff or his advocate. The defendant denied the existence, validity and genuineness of the letters dated 2nd November, 1995, 20th November, 1995 and 20th December, 1995. The defendant further contended that on the contrary the defendant had forfeited the said amount, namely, Rs. 25,51,000/- in view of failure on the part of the plaintiff to pay the balance consideration within the time stipulated and/or agreed upon between the parties. The defendant contended that the plaintiff had agreed to purchase the total consideration was Rs. 2,04,08,000/- about 200 acres of agricultural land at village - Nagda, District- Diwas, in the State of Madhya Pradesh at a total consideration of Rs. 2,04,08,000/-. According to the defendant, such agreement was entered into in December, 1992 and the same would be evident from the letters dated February 18, 1993, March 15, 1993, April 28, 1994. The plaintiff in spite of knowledge and notice of such forfeiture suppressing the same instituted the instant suit. It was further contended that in view of the fact that no agreement was entered into at Calcutta and the payments, if at all, were required to be made at Mumbai, this Court has no territorial jurisdiction to try and determine the suit. 5. The plaintiff presented himself as a witness. It was further contended that in view of the fact that no agreement was entered into at Calcutta and the payments, if at all, were required to be made at Mumbai, this Court has no territorial jurisdiction to try and determine the suit. 5. The plaintiff presented himself as a witness. In answer to dishonour of earlier cheques, the witness stated that between February and March, 1993, the plaintiff issued two cheques of the same amount that were dishonoured by City Bank, such cheques were made over to Dr. Kasliwal, the father of the defendant. The payment was stopped because the cheque issued by IFB Industries or maturity of the inter-corporate deposit for Rs. 50 lakhs was not honoured on that particular dated when the said two cheques were deposited by the defendant for encashment. It was because of that the plaintiff issued the stop payment instruction, thereafter, the said demand draft was issued for Rs. 25,51,000/- from Calcutta. The plaintiff has proved the factum of the transaction as also the delivery of the despatch of the letter dated 2nd November, 1995, 20th November, 1995 and 20th December, 1995 being Exhibit "B", C1, D1 along with the postal receipts to establish that such letters addressed to the defendant was duly received by the said defendant and it was on the basis of instruction being received from the defendant that Mr. J.W. Mahajan replied to the legal notice dated 2nd November, 1995 issued by or on behalf of the plaintiff. 6. The service of the notice upon the defendant stands proved. Although the defendant has tried to create an illusion that the defendant had never instructed nor had any occasion to instruct, Mr. J.W. Mahajan replied to the legal notice dated 2nd November, 1995 issued by or on behalf of the plaintiff. 6. The service of the notice upon the defendant stands proved. Although the defendant has tried to create an illusion that the defendant had never instructed nor had any occasion to instruct, Mr. Mahajan to reply to any such letter as there could not be any response to such alleged letters as defendant never received the said letter and the defendant resides in Puja Bungalow and not Puja Building (although other details of the address remain same) but the fact remains that the record of the Court shows that the duplicate copy of the writ of summons duly sent by Registered Post have been received by the defendant at the address mentioned in the cause title coupled with the fact that the notices of the Commissioner who was appointed in the proceeding earlier were received by the defendant mentioned in the cause title causing appearance of the defendant in the suit at a later stage. 7. The affidavit of Sri Amar Kumar Sengupta, an assistant of the Sheriff's Office regarding service of writ of summons records as follows:- "(1) That I on 8th October, 1996 forwarded a duplicate copy of writ of summons with copy of plaints by post under Registered Cover with acknowledgement due addressed to the defendant as follows:- Manoj S. Kasliwal 'Puja Building' 17, Gulmahar Colony Indore, Madhya Pradesh (2) That the letter of acknowledgement receipt for the abovementioned defendant was received on 7.5.1997 by this office through the General Post Office, Kolkata. (3) I, Amar Kumar Sengupta, further say that on the same day I forwarded original writ of summons alongwith a duplicate of writ of summons with copy of plaints by Registered Post addressed to the District Judge, Indore, Madhya Pradesh, through Court Service, but neither original writ of summon nor any report has yet been received till date into this office, despite two reminders letters issued on 27.1.1997 vide letter No.36 and on 1.8.2000 vide letter No.423. The statement of service reports are enclosed herewith. (4) The original writ of summons could not be filed to the Summon Dept., High Court, Kolkata since the same has not returned back to this office from the Court of the Learned District Judge, Indore, Madhya Pradesh." 8. The statement of service reports are enclosed herewith. (4) The original writ of summons could not be filed to the Summon Dept., High Court, Kolkata since the same has not returned back to this office from the Court of the Learned District Judge, Indore, Madhya Pradesh." 8. This clearly shows that the defendant received the duplicate copy of the writ of summons on 7th May, 1997 at the address mentioned in the cause title. 9. Having arrived at a conclusion that the defendant was served with the legal notice dated 2nd November, 1995 the obvious question that would arise is what response did it evoke from the defendant regarding loan transaction as stated in such notice of demand. In replying to the said notice, the defendant made a bald denial and not even a word mentioned in answer to the legal notice concerning such oral agreement for sale and the money having been received as part consideration concerning such oral agreement or forfeiture of such amount. The defendant, on the other hand, had relied upon three documents being Exbt. 4, 5 and 6, namely, receipt-cum-acknowledgement dated 18th February, 1993 signed by Manoj S. Kasliwal, a letter dated 15th March, 1993 addressed to the plaintiff and signed by the defendant and a letter dated 28th April, 1994 communicating that the defendant has forfeited the amount of Rs. 25,51,000/-. The defendant contended that all the three letters were hand-delivered to the plaintiff at its office at Mumbai by one Mr. R.K. Mungar. Mr. R.K. Mungar verified the written statement on behalf of the defendant and he deposed that he was working as an accountant under the defendant since 1992. 10. The defendant apparently had taken the pain to deliver all the aforesaid three documents being Exbt.4, 5 and 6 to the plaintiff at Mumbai by hand as tried to be established from the evidence of Mr. Mungar, the accountant of the defendant No.1 who had travelled all the way from Indore to deliver the said three documents to the plaintiff instead of sending the documents by a Registered post with A.D. which could have saved costs and inconveniences and credibility of the evidence regarding service of such letters and documents to the plaintiff in establishing its claim of an oral agreement of sale of 200 acres of land at Diwas. 11. 11. There is no requirement of law that an agreement or contract of sale of immovable property should only be in writing. However, heavy burden lies on the party relying on such oral agreement to prove that there was consensus ad idem the parties for a concluded oral agreement for sale of immovable property, and that vital and fundamental terms for sale of immovable property were concluded between the parties orally and a written agreement, if any, to be executed subsequently would be a formal agreement incorporating the terms already settled by the oral agreement. (Brij Mohan and ors v. Sugra Begum and ors., (1990) 4 SCC 147 , p 158.) 12. The said three Exhibits are in relation to the agreement for sale and the claim of the defendant that there was an oral agreement and the said amount of Rs. 25,51,000/- was forfeited in view of alleged failure on the part of the plaintiff to pay the balance consideration within the agreed time. The letter was not sent by a Registered Post and instead hand-delivered which conduct was sought to be explained and supported on a claim that the relationship between the parties were friendly and even an impolite letter forfeiting a sum of Rs. 25,51,000/- sparking off hostility does not require service by Registered Post. The contents of the said letters are not exchange of greetings or feelings but an attempt to establish a jural relationship and concerning a commercial transaction which goes as far to deny the claim of the plaintiff on the ground of failure to pay the balance consideration. The defendant is required to establish that, in fact, there was an agreement for sale and the said amount was paid as an earnest money in relation to the said transaction. Once the plaintiff has been able to show that the defendant had received the said sum of Rs. 25,51,000/-, the defendant would be required to establish that such amount was paid as a part consideration of the agreement for sale and such onus becomes more heavier in absence of a written agreement for sale. The defendant has failed to discharge the said onus. The burden of proof to establish the oral agreement for sale rests with the defendant. 25,51,000/-, the defendant would be required to establish that such amount was paid as a part consideration of the agreement for sale and such onus becomes more heavier in absence of a written agreement for sale. The defendant has failed to discharge the said onus. The burden of proof to establish the oral agreement for sale rests with the defendant. In A. Raghavamma v. A. Chenchamma reported in AIR 1964 SC 136 , the Hon'ble Supreme Court considered the distinction between burden of proof and onus of proof and held: - "There is an essential distinction between burden of proof and onus of proof, burden of proof lies upon the person who has to prove a fact and it never shifts, but the onus of proof shifts. The burden of proof in the present case undoubtedly lies upon the plaintiff to establish the factum of adoption and that of partition. The said circumstances do not alter the incidence of the burden of proof. Such considerations, having regard to the circumstances of a particular case, may shift the onus of proof. Such a shifting of onus is a continuous process in the evaluation of evidence." 13. The argument that the friendliness between the parties would not require such letters to be delivered by Registered Post or through the General Post Office clearly falls to the ground once the contents of the said letters are looked into and having regard to the legal notices issued by the plaintiff to the defendant. The contentious issues raised in the said Exhibit 4, 5 and 6 does not call for service of such letter and/or documents by hand and when serious dispute is raised with regard to existence, validity and service of such letters, the party claiming due service of such notice is required to establish service of such notices by cogent and reliable evidence. It is settled principle of law that such letters establishing a right or denying a right to property are required to be sent by Registered Post through the General Post Office. Considering the contents of the Exbt. 4, 5 and 6 and an attempt to establish an oral agreement for sale even a notice under certificate of posting would doubtful credibility. (Ramshankar Prosad & Ors. v. Sindri Iron Foundry (P) Ltd. & Ors.; 70 CWN 520, M.S. Madhusoodhanan & Anr. Considering the contents of the Exbt. 4, 5 and 6 and an attempt to establish an oral agreement for sale even a notice under certificate of posting would doubtful credibility. (Ramshankar Prosad & Ors. v. Sindri Iron Foundry (P) Ltd. & Ors.; 70 CWN 520, M.S. Madhusoodhanan & Anr. v. Kerala Kaumudi (P) Ltd. & Ors.; 2004 (9) SCC 204, Shiv Kumar & Ors. v. State of Haryana & Ors.; 1994(4) SCC 445 ) The defendant has failed to establish the oral agreement for sale and that such aliunde payment was made as part consideration. Unlike the defendant, as discussed hereinabove, the plaintiff has been able to establish service of such legal notices and materials on record would show that the defendant had due knowledge and/or notice of the claim of the plaintiff against the defendant prior to the institution of the suit. 14. Mr. Roy further contended that had it been a loan transaction, the plaintiff following a mercantile system of accounting would have shown interest accrued on the said amount in his income tax return. Mr. Roy has relied upon question Nos. 121 to 129 in Cross-examination in support of contention. The plaintiff during his cross-examination has stated that he has shown the said amount in his income tax return under the Heading "loan and advances". If he had not show the accrued interest in connection with the said loan amount, it is for the income tax authorities to consider the matter and that by itself would not show that the plaintiff advanced the said amount to the defendant as loan. 15. Insofar as the jurisdictional issue is concerned, there is no dispute that such demand draft was issued from Calcutta. The demand draft was issued by the said bank of Saurashtra, Calcutta Branch. The plaintiff has categorically stated that such amount was lent and advanced from Calcutta. In absence of any agreement to show that payment was to be made in Mumbai, I feel that this Court has jurisdiction to try and determine the suit as the plaintiff being a creditor is entitled to receive the money at Calcutta wherefrom the loan was disbursed on the wholesome principle that defendant must seek the creditor. (S.P. Consolidated Engineering Co. (S.P. Consolidated Engineering Co. (P) Ltd. v. Union of India & Anr.; AIR 1966 Cal 259 , State of Punjab v. A.K. Raha (Engineers) Ltd.; AIR 1964 Cal 418 , Assam Company Limited & Ors. v. State of Andhra Pradesh & Ors.; 2010 (3) CHN (Cal) 26) On consideration of the materials on record the evidence and on the basis of the findings arrived by me, the plaintiff has been able to prove its claim. Accordingly, the plaintiff it is entitled to a decree for a sum of Rs. 25,51,000/-. The plaintiff, however, has failed to establish that there was an agreement for payment of interest at the rate of 24% per annum. Having regard to the fact that the suit was instituted at a much belated stage but within the period of limitation, this Court is not inclined to grant any interest prior to the institution of the suit. The rate of interest is exorbitant. In my view, on just and equitable consideration and having regard to the fact that such amount was not paid gratuitously, the plaintiff would be entitled to interest @ 8% per annum. Moreover, interest is the premium paid for the use of money and is not a penalty. It is the normal accretion on capital and tantamount to compensation as person entitled for recovery has been deprived of right to use the said amount. However, the plaintiff is entitled to a reasonable rate of interest which under the facts and circumstances would be 8% per annum simple. The principal amount shall carry interest at the rate of 8% per annum from the date of institution of the suit till repayment. The plaintiff will be further entitled to cost assessed at Rs. 10,000/-. The suit is accordingly decreed. 16. The department is directed to draw up the decree expeditiously. Urgent certified photocopy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.