Research › Search › Judgment

Karnataka High Court · body

2019 DIGILAW 1363 (KAR)

Peter J. R. Prabhu v. Daphney Dmello

2019-06-20

H.B.PRABHAKARA SASTRY

body2019
JUDGMENT : H.B. Prabhakara Sastry, J. The present appellant was the defendant against whom the present respondent as a plaintiff had instituted a suit in the Court of learned XXX Addl. City Civil Judge, Bengaluru City, (hereinafter for brevity referred to as 'trial Court'), in O.S.No.4852/2001 for recovery of a sum of Rs. 4,46,090/- with interest at the rate of 15% p.a. thereupon. The said suit came to be partly decreed by the judgment and decree of the trial Court dated 30.1.2012. It is against the said judgment and decree, the defendant in the trial Court has preferred this appeal. 2. The summary of the case of the plaintiff in the trial Court is that she had lent a sum of Rs. 4,00,000/- to the defendant in the year 1996 through a cheque bearing No.347996, dated 12.5.1996, drawn on Andhra Bank. The defendant had promised to repay the said loan with interest at 24% p.a. In that regard, the defendant had paid interest for one year and thereafter stopped making payment and also failed to return the principal. However, on 20.1.1999, plaintiff and defendant came to a fresh understanding for repayment of Rs. 5,01,400/-, the balance calculated as on 31.12.1998 and succeeding installment with interest thereon to be paid on 15th of every second month until entire amount is duly repaid. Though the defendant paid first five installments, wherein, the last installment being on 15.9.1999, but, thereafter failed to honour the agreement. Further, he paid Rs. 15,000/- through cheque on 9.10.2000. Plaintiff got issued a legal notice to him on 19.1.2001, but, the defendant did not respond. This constrained the plaintiff to institute a suit for recovery of money against the defendant. 3. In response to the summons served upon him, the defendant appeared through his counsel and filed the written statement, wherein he has denied the alleged loan transaction with the plaintiff. He also denied that he had paid interest for one year and thereafter failed to pay the principal amount. He further denied the alleged fresh understanding said to have been arrived at between them on 20.1.1999, fixing new repayment schedule of Rs. 5,01,400/-. He specifically contended that at no point of time he had borrowed any loan from the plaintiff nor paid any installment or interest as per the alleged understanding said to have been arrived at between them on 20.1.1999. 4. 5,01,400/-. He specifically contended that at no point of time he had borrowed any loan from the plaintiff nor paid any installment or interest as per the alleged understanding said to have been arrived at between them on 20.1.1999. 4. Based on the pleadings of the parties, the trial Court framed the following issues : 1. Whether the plaintiff proves that the defendant borrowed a sum of Rs.4,00,000/- from him on 12-5-1996 agreeing to repay the same with interest at 24% p.a.? 2. Whether the plaintiff proves the execution of alleged agreement dtd.20-1-1999 as averred in para-5 of the plaint? 3. Whether the plaintiff proves the liability of defendant to pay the suit claim? 4. What decree or order parties entitle to? In support of her case, the plaintiff got herself examined as PW-1 and got marked documents at Exs.P-1 to P-5. The defendant himself got examined as DW-1 and got marked documents from Exs.D-1 to D-6. During the course of cross-examination of DW-1, Ex.P-5 came to be marked. 5. After hearing both side, the trial Court by its judgment and decree dated 30.1.2012, answered issue Nos.1 and 2 in the affirmative and issue No.3 partly in the affirmative and partly decreed the suit of the plaintiff. 6. Lower Court records were called for and the same are placed before this Court. 7. Heard the arguments of learned counsel from both side, perused the materials placed before this Court, including the impugned judgment and decree and the lower Court records. 8. For the sake of convenience, the parties would be referred to as per their ranks before the trial Court. 9. In the light of the above, the only point that arise for my consideration is : Whether the appeal deserves to be allowed by setting aside the judgment and decree under appeal? The plaintiff as PW-1 in her examination-in-chief in the form of affidavit evidence has reiterated the plaint averments made by her in her plaint. She has stated that the defendant who was a known person to her, approached her on 12.5.1996 and borrowed a sum of Rs. 4,00,000/- for his financial needs. The said defendant along with his wife Mrs. The plaintiff as PW-1 in her examination-in-chief in the form of affidavit evidence has reiterated the plaint averments made by her in her plaint. She has stated that the defendant who was a known person to her, approached her on 12.5.1996 and borrowed a sum of Rs. 4,00,000/- for his financial needs. The said defendant along with his wife Mrs. Carmel Prabhu, jointly executed an on-demand Promissory Note in her favour agreeing jointly and severally to pay the amount so borrowed on demand with interest thereon at 24% p.a. The loan consideration was paid to them through the cheque. However, the defendant and his wife failed to pay the interest on the loan amount, so also, the principal amount despite repeated requests and demands made by the plaintiff. However, the defendant came out with a settlement plan and persuaded the plaintiff to return the original Promissory Note to him and made the plaintiff to execute jointly with him a Deed styled "Acknowledgement of Liability and Schedule of Repayment", which the witness has marked at Exs.P-1 and P-2 respectively. The witness has further stated that even the defendant did not repay the loan amount as per the repayment schedule and after making the payment of about five installments, he stopped from paying the remaining installment and thus has become a defaulter. Despite legal notice served upon him, a copy of which the witness has marked at Ex.P-4, the defendant failed to repay the loan amount. The witness was subjected to a detailed cross-examination. However, she adhered to her original version even in her cross-examination. 10. The defendant got himself examined as DW-1. In his examination-in-chief in the form of affidavit evidence, he has reiterated the contentions taken up by him in his written statement. He has denied that he has ever approached the plaintiff and borrowed hand loan, much less, a sum of Rs. 4,00,000/- on 12.5.1996. He stated that, in the absence of any loan transaction, the question of he agreeing to pay any interest, much less, at the rate of 24% p.a., hardly arises. He also denied that he entered into an understanding agreement with the plaintiff and agreed to repay the alleged due as per the repayment schedule. In his support, he got marked the statement of accounts prepared by him at Ex.D-1 and Statement of his bank account at Exs.D-2 to D-5. He also denied that he entered into an understanding agreement with the plaintiff and agreed to repay the alleged due as per the repayment schedule. In his support, he got marked the statement of accounts prepared by him at Ex.D-1 and Statement of his bank account at Exs.D-2 to D-5. He was subjected to a detailed cross-examination. 11. In the light of the above pleadings and evidence of the parties, the first point of argument of learned counsel for the appellant/defendant is that the plaintiff has not produced on-demand Promissory Note said to have been executed by the defendant and his wife on 12.5.1996, under which, it is alleged that the defendant had borrowed a sum of Rs. 4,00,000/-. As such, non-production of the original document of alleged loan and intentionally withholding the said document leads to an adverse inference to be drawn in favour of the defendant under Section 114 of Evidence Act. 12. No doubt, the plaintiff who has stated that the loan transaction had taken place on 12.5.1996 and is documented under on-demand Promissory Note, has not produced the alleged on-demand Promissory Note, however, she has stated in her evidence as PW-1 that the defendant persuaded her to return the said original Promissory Note to them when they came forward with alleged settlement agreement. However, the defendant has not accepted the same. On the other hand, the defendant, as DW-1, in his cross-examination, in unequivocal terms has stated that the plaintiff had lent him a loan of a sum of Rs.4,00,000/- in the year 1996 and the said amount was paid to him through cheque, however, there was no agreement for the payment of interest on the said loan amount. He further stated that, he does not remember about he, joined by his wife, executing the Promissory Note in that regard. The said statement by none else than the defendant himself in his cross-examination makes it a clear admission on his part about the loan transaction that has taken place between the plaintiff and himself, wherein, he had borrowed a sum of Rs. 4,00,000/- from the plaintiff in the year 1996. According to the plaintiff, the said loan was given to the defendant on 12.5.1996. 4,00,000/- from the plaintiff in the year 1996. According to the plaintiff, the said loan was given to the defendant on 12.5.1996. Therefore, even in the absence of production of the on-demand Promissory Note, in view of the specific admission by the defendant about the loan transaction, it stands proved that the defendant had availed a loan of Rs. 4,00,000/- from the plaintiff on 12.5.1996. As such, the argument of learned counsel for the appellant that an adverse inference is required to be drawn in favour of the defendant under Section 114 of Evidence Act, is not acceptable. 13. The second argument of the learned counsel for the appellant is that the alleged understanding or an Agreement of Understanding at Ex.P-2 is a created document. There is lot of inconsistency in the pleading of the plaintiff in her evidence and also the documents marked by her as exhibits. In that regard, learned counsel for the appellant drew the attention of this Court recording nomenclature of Ex.P-1 as shown in the said document with that of its mentioning in the plaint with a nomenclature. 14. In the plaint, the plaintiff has stated that on 20.1.1999 as per the understanding between the parties, an agreement was entered into between the parties to the suit. The said agreement also includes a repayment schedule as an annexure. Thus, the plaintiff calls it as an agreement. The actual document which is at Ex.P-1 identifies with its title as "Acknowledgement of Liability and Schedule of Repayment". The very same document in the legal notice sent by the plaintiff to the defendant, a copy of which is marked at Ex.P-3, calls it as a fresh agreement. Ex.P-2 is said to be the annexure to Ex.P-1 in the form of repayment schedule. The defendant denies the execution of the said documents which are at Exs.P-1 and P-2 as the one executed by him. The recital of Ex.P-1 commences with the word "This is to acknowledge and place on record that a sum of Rs.501,400/- (Rupees Five Lakhs One Thousand Four Hundred only) has been found due from me on the basis of the account settled between us as on 23, November 1998 in respect of the On Demand Promissory Notes executed by me on 12.5.1997 in favour of Mrs. DAPHNE D'MELLO, residing at Kevin Cote, No.6, M.E.G. Officers Colony, Banasawadi Road, Bangalore - 560 033." At the end of the document, it is shown to have been signed by the defendant. Below that, an endorsement is shown to have been made by the plaintiff - Daphne D'Mello, stating that she has accepted the terms and conditions regarding the liability and schedule of repayment mentioned in the said document by the defendant. After the said endorsement, the plaintiff has signed the same. A reading of the said document basically appears to be in a manner of acknowledgement of debt with an undertaking to repay the said acknowledged debt in the installments as per the annexure (repayment schedule) said to have been annexed with the document. The said annexure is at Ex.P-2, which is the repayment schedule, which also go to show that, commencing from the date 15.1.1999 up to 15.5.2002, spreading in three years time, how and with what sum, the loan, along with agreed interest thereupon, is required to be paid by the defendant to the plaintiff. Merely because the plaintiff has called the said document as 'Agreement' in her plaint and as an 'Understanding' in her evidence and the document identifies as 'Acknowledgement of Liability', the same would not take away the value of the document. It is the contents of the document and what it infers that matters, but, not how the party has called it in his/her plaint. As such, merely because there are some minor variations in identifying the said document with some names, that by itself would not either take away the case of the plaintiff or imbibe any suspicion in her case with respect to the said document. 15. The defendant who had in his written statement categorically denied that he availing any loan from the plaintiff, has later found to have admitted in his cross-examination as DW-1, the receipt of a loan of Rs.4,00,000/- by him from the plaintiff, in return, he executing a Promissory Note in her favour. Similarly, the very same defendant who has disowned the document at Ex.P-1, dated 20.1.1999 in his written statement, has later, in his cross-examination, admitted that Ex.P-1 contains his signature. He has also stated that he can identify some of the signatures in the said document as his signatures. 16. Similarly, the very same defendant who has disowned the document at Ex.P-1, dated 20.1.1999 in his written statement, has later, in his cross-examination, admitted that Ex.P-1 contains his signature. He has also stated that he can identify some of the signatures in the said document as his signatures. 16. Thus, his admitted signature, which is marked at Ex.P-1(a), is the main signature in the said document signed as Executant of the said document. The other two signatures at Exs.P-1(b) and P-1(c), which he has stated as not his signatures are on the left side margin of Page-1 of the very same document without bearing any special significance about them. On the other hand, there are also three more signatures on the right side margin of the very same document in its Page-1 which are also of the defendant and those signatures are shown to have been made authenticating the corrections/alterations carried out in the said document. Those corrections that have been carried out in the said document is with respect to the total amount shown as the acknowledged liability on the part of the defendant, which amounts to a sum of Rs.5,01,400/-. Therefore, the contention of the defendant that Ex.P-1 is not his document is not acceptable. On the other hand, it clearly go to establish that it is the defendant who has executed the said document. The recital of the said document go to show that as on the date of execution of the said document, he has acknowledged his liability at a sum of Rs.5,01,400/- towards the plaintiff. To disprove that as on the said day, he did not owe the said sum to the plaintiff, the defendant has not produced any documents from his side. 17. As observed above, Ex.P-2, which is a repayment schedule, is an annexure to Ex.P-1. The said annexure, apart from showing the total outstanding balance payable by the defendant to the plaintiff as at Rs.5,01,400/-, has also given a detailed schedule for payment of agreed amount by the defendant to be made to the plaintiff as per Ex.P-1. It has provided for twenty installments with reduced balance, nineteen installments with equal principal amount of Rs.25,000/- each and making the 20th installment towards remaining balance of Rs.13,320/-. It has provided for twenty installments with reduced balance, nineteen installments with equal principal amount of Rs.25,000/- each and making the 20th installment towards remaining balance of Rs.13,320/-. The proportionate interest has been calculated and added to it to arrive at the figure of total amount payable by the defendant to the plaintiff in each of the installments commencing from 15.1.1999. 18. The defendant as DW-1 himself has stated in his cross-examination that he has produced a document at Ex.D-1 to show the payment made by him to the plaintiff through cheque. Admittedly, the said document at Ex.D-1, which is in the form of a tabulated statement of account showing the details of cheques, principal amount and date, has been authored by the defendant himself. He has also produced his bank account statements for the relevant periods and got them marked at Exs.D-2, D-3, D-4 and D-5 and the particular entries therein are at Exs.D-1(a), D-2(a), D-3(a), D-4(a) and D-5(a) respectively. 19. A reading of Exs.D-2(a), D-3(a), D-4(a) and D-5(a), clearly go to show that those entries are co-related and corresponding entries at Item Nos.2, 3, 4 and 5 in Ex.P-2, which is the repayment schedule and which entries are particularly marked as Exs.P-2(a), P-2(b), P-2(c), P-2(d) and P-2(e). Further, the amount in Ex.D-2(a) tallies with second entry in Ex.D-1, the cheque number in Ex.D-3(a) tallies with Item No.3 in Ex.D-1 and the cheque number in Ex.D-4(a) tallies with Item No.5 in Ex.D-1 and the cheque Nos. in Ex.D-5 (a) and Ex.D-5(b) tallies with cheque number and the amounts in Item Nos.4 and 6 respectively in Ex.D-1. Thus, the statement of DW-1 himself that Ex.D-1 shows the details of the payment made by him to the plaintiff would further go to show that those payments are with respect to first five installments as per the repayment schedule at Ex.P-2. 20. Therefore, it is clearly established that the defendant pursuant to the loan of a sum of Rs. 4,00,000/- availed by him from the plaintiff was in due with a sum of Rs. 5,01,400/- as on the date of execution of the document at Ex.P-1 and that he had undertaken to repay the said amount in twenty installments as scheduled in Ex.P-2 and that towards repayment of the said loan amount, as per the installments, he had paid five installments. 5,01,400/- as on the date of execution of the document at Ex.P-1 and that he had undertaken to repay the said amount in twenty installments as scheduled in Ex.P-2 and that towards repayment of the said loan amount, as per the installments, he had paid five installments. Since the defendant's liability towards the plaintiff after fifth payment made has reduced to Rs. 3,76,400/- as could be seen from the repayment schedule at Ex.P-2 and since the defendant has not produced any document to show that he has paid the remaining installments either in full or in part, it has to be held that the plaintiff has proved that on 15.11.1999, when the sixth installment was due, the defendant was in total due to the plaintiff a sum of Rs. 3,76,400/-. 21. The outstanding liability that was acknowledged by the defendant through Ex.P-1 was Rs. 5,01,400/- as on 31.12.1998, which was arrived at by calculating the interest on Rs. 4,00,000/- at 18% p.a. from 1.4.1997 to 30.9.1997 and thereafter, the rate of interest was arrived to 12% p.a. from 1.10.1997 to 31.12.1998. Since the defendant has acknowledged the outstanding liability, which includes the said interest also, and it is after acknowledging the said liability, has even paid five installments in reducing the said liability due from him towards the plaintiff, the rate of interest charged by the plaintiff or agreed to between the parties till the sixth installment becoming due i.e., on 15.11.1999, cannot be interfered with. 22. However, for the remaining amount due, which is a sum of Rs. 3,76,400/-, though the agreed rate of interest as per Ex.P-1 was at 15% p.a., the trial Court has reduced it and confined it to at 12% p.a. The reason given by the trial Court for that matter is that DW-1 has admitted that he was Director of Skyline Constructions Limited and that the seal of the Company is at Ex.P-4. As such, considering the fact that while calculating the interest from 1.10.1997 to 31.12.1998, it was only 12% interest that was applied, the trial Court has reduced the interest at 12%. As such, considering the fact that while calculating the interest from 1.10.1997 to 31.12.1998, it was only 12% interest that was applied, the trial Court has reduced the interest at 12%. However, after going through the materials placed before this Court and more particularly, evidence led by both side and also considering the special facts and circumstance of the case and the fact that the rate of interest in Banks are also moderately on a lower side on the Fixed Deposits, I am of the view that confirming to the present case, the said rate of interest fixed by the trial Court at 12% p.a. be further reduced and fixed at 8% and payable from 15.11.1999 on outstanding principal amount of Rs. 3,76,400/- till realisation. Accordingly, I find no reason to interfere in the impugned judgment and decree passed by the trial Court, except reducing the rate of interest. 23. Accordingly, I proceed to pass the following order: ORDER The Appeal is allowed in part. The judgment and decree dated 30.1.2012, passed by the learned XXX Addl. City Civil Judge, Bengaluru City, in O.S.No.4852/2001, is modified to the extent that the rate of interest awarded by the trial Court at 12% p.a. is reduced and fixed at 8% p.a. on the principal amount of Rs.3,76,400/- from 15.11.1999 till realisation. However, the order passed by the trial Court regarding the deductions that has to be given to the payments said to have been made by the defendant remains unaltered and the same are required to be given while arriving at final figure. Draw modified decree accordingly. The Registry is directed to transmit a copy of this judgment along with lower Court records to the lower Court without delay.