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2020 DIGILAW 1186 (KAR)

Ganapathi Subraya Hegde R/o Hulagol v. Sumanth Finance

2020-06-23

N.S.SANJAY GOWDA

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JUDGMENT N.S. Sanjay Gowda, J. - The appeal is admitted to consider the following substantial question of law. "Whether the Trial Court and the Appellate Court were justified in directing recovery of the loan amount of Rs.15,000/- along with interest in the light of the finding recorded by this Court in CrRP No.2204/2010 (Ex D-4) that the appellant had borrowed only a sum of Rs.3,000/- as loan? 2. The respondent though served has chosen to remain absent. 3. By consent, the matter is taken up for final disposal. 4. The plaintiff-respondent filed a suit contending that it had lent a sum of Rs.15,000/- as a loan to defendant No.1 and defendant Nos.2 and 3 had stood as guarantors to the said loan. It was stated that defendant No.1 had issued a cheque bearing No.783123 for a sum of Rs.15,000/-, which had been dishonoured, which had resulted in filing of a criminal case in C.C.No.3126/2000 in which the defendant No.1 had in fact been convicted. 5. It was also stated that defendant No.3 being the guarantor had also issued another cheque bearing No.591782 for a sum of Rs.16,000/- and since that had also bounced, another criminal case in C.C.No.3128/2000 had been filed. 6. It was also stated that in respect of the loan given on 04.10.1999, the defendants had given acknowledgements of their debt on 14.01.2003 and 21.07.2005 and since the defendants had failed to repay the loan amount despite issuance of a legal notice, they were constrained to file the suit on 15.06.2007. 7. The said suit was contested by defendants Nos.1 and 2. The defendant No.3 did not file any written statement. 8. The defendant No.1 denied the entire loan transaction. He however did admit that a criminal proceeding in C.C.No.3126/2000 had been initiated against him and the same had ended in his conviction and against the said conviction, he had filed an appeal which was pending. 9. The Learned Counsel for the Appellant contended that it was not in dispute that ultimately the matter came up to this Court by way of a Criminal Revision Petition No.2204/2010. He stated in the said Revision, this Court had clearly and categorically held that a loan of only Rs.3,000/- had been taken by him and the High Court had ordered that the plaintiff be paid a sum of Rs.10,000/- as compensation and Rs.1,000/- be paid as a Fine to the State. He stated in the said Revision, this Court had clearly and categorically held that a loan of only Rs.3,000/- had been taken by him and the High Court had ordered that the plaintiff be paid a sum of Rs.10,000/- as compensation and Rs.1,000/- be paid as a Fine to the State. 10. He stated that since the plaintiff No.1 had deposited the entire sum of Rs.11,000/-, as ordered in CrRP No.2204/2010, the plaintiff was not entitled to any further sum in the present proceedings. 11. The Trial Court, on consideration of the evidence, came to the conclusion that the plaintiff had proved that defendants had borrowed a sum of Rs.15,000/- and the defendants had failed to repay the said sum. The Trial Court also came to the conclusion that the plaintiff was entitled to pay interest @ 21% as claimed by the plaintiff and it accordingly proceeded to decree the suit for a sum of Rs.41,397/- along with interest @ 21% from the date of the suit. 12. The defendants, being aggrieved, preferred an appeal. 13. In appeal, the defendants once again reiterated the very same contention advanced by them in the suit, i.e., in the light of the finding recorded by this Court in Crl.RP No.2204/2010, that the defendant No.1 had only borrowed a sum of Rs.3,000/-, the Trial Court was in error in decreeing the suit. It was also contended that since the defendant No.1 had complied with the directions passed in Crl.RP No.2204/2010 and deposited a sum of Rs.10,000/- as compensation. The decree of the Trial Court directing the defendants to pay a sum of Rs.41,397/- along with interest was not sustainable. 14. The Appellate Court on re-appreciation of the evidence came to the conclusion that the defendants could not take advantage of the judgment passed in their favour in the Revision arising out of the proceedings that had been initiated against them under Section 138 of N.I.Act. It observed that the remedy to file a suit for recovery in a civil Court and the remedy to initiate proceedings under the N.I.Act were two independent and distinct remedies and the defendants cannot therefore be permitted to contend that their liabilities stood discharged on payment of compensation amount awarded in the proceedings under Section 138 of N.I.Act. 15. It observed that the remedy to file a suit for recovery in a civil Court and the remedy to initiate proceedings under the N.I.Act were two independent and distinct remedies and the defendants cannot therefore be permitted to contend that their liabilities stood discharged on payment of compensation amount awarded in the proceedings under Section 138 of N.I.Act. 15. The Appellate Court, however, came to the conclusion that defendants were entitled to setoff a sum of Rs.10,000/- that they had paid as compensation and it accordingly proceeded to modify the judgment of the Trial Court and directed the defendants to pay a sum of Rs.31,397/-, thereby giving a setoff for the sum of Rs.10,000/- paid by the defendants as compensation. 16. The Appellate Court found that the award amount of interest @ 21% p.a. was erroneous in as much as the plaintiff themselves had claimed interest @ 16%. The Appellate Court accordingly modified the interest also @ 16% p.a. 17. The question that arises for consideration in this second appeal, as stated above, is whether the decision rendered in the proceedings under Section 138 of N.I.Act that the defendants had availed a loan of only Rs.3,000/- can be ignored and as a consequence whether the judgment of the Trial Court as well as the Appellate Court can be sustained. 18. It cannot be disputed that defendant No.1 was convicted in a proceeding under Section 138 of N.I. Act on 17.03.2007 i.e. three months prior to the filing of the suit. In the proceedings under Section 138, initially, the Magistrate had accepted that a loan of Rs. 15,000/- had been given and the cheque amount of Rs.15,000/- had been issued towards the discharge of the loan and it had accordingly convicted the 1st defendant and directed him to pay a sum of Rs.30,000/-. The said order of conviction has also been affirmed in appeal. 19. This Court, however, on re-appreciation of the entire evidence in CrRP No.2204/2010 has recorded a finding that the contention of the plaintiff that he had advanced a loan of Rs.15,000/- could not be accepted and the allegation that a loan of Rs.15,000/- had been given could not be inferred only because a cheque had been issued for the said sum and a promissory note had also been issued for the said amount. This Court proceeded to hold that the case put forth by the accused that he had availed a loan of Rs.3,000/- was required to be accepted and this Court accordingly set aside the order of conviction and the ordered the 1st defendant herein to pay a sum of Rs.11,000/- as compensation, out of which, a sum of a sum of Rs.10,000/- was ordered to be paid as compensation to the plaintiff and a sum of Rs. 1,000/- be paid to the State as fine. 20. This Court also noticed that defendant No.1 had already deposited a sum of Rs.7,500/- before the Trial Court and it proceeded to direct the defendant No.1 herein to deposit the remaining amount of Rs.3,500/-. 21. Learned counsel for the appellant submits that the said order has been complied in full and the balance amount of Rs.3,500/- has been deposited. 22. From the facts narrated above, it is clear that this Court on consideration of the very same materials which were produced before the Trial Court had come to the conclusion that the loan given by the plaintiff was only for a sum of Rs.3,000/- and not for a sum of Rs.15,000/-. Since this Court has already given a finding on the basis of the very same contentions and materials relied upon by the plaintiff, it would not be just and proper to sustain the finding of the Trial Court and the Appellate Court that the plaintiff had in fact lent a sum of Rs.15,000/- as loan to the 1st defendant. 23. It is to be stated herein that notwithstanding the fact that a proceeding under Section 138 and a claim for recovery of the money for the same transaction, can be simultaneously and independently maintained, however, in the event of a finding being recorded by the Courts in the proceedings under Section 138 of N.I.Act as regards the sum given as loan and the same was different than the sum claimed by the complainant, the said finding in so far as it relates to loan amount will have to be accepted, especially, when the said finding has been accepted by the Complainant. 24. In the instant case, the plaintiff has accepted the order passed in Crl.RP 2204/2010 and as a consequence, the finding recorded therein that only a sum of Rs. 24. In the instant case, the plaintiff has accepted the order passed in Crl.RP 2204/2010 and as a consequence, the finding recorded therein that only a sum of Rs. 3,000/- was given as loan will have to be accepted in the Recovery proceedings filed before the Civil Court. In my view, the Civil Court, cannot go beyond the said finding regarding the loan amount lent and if that were to be permitted, as regards the actual amount lent, there would be a divergence of views between two courts in respect of the same transaction, which is clearly impermissible in law. 25. I am therefore of the view that the finding recorded by this Court in Crl.RP No.2204/2020 that only a sum of Rs.10,000/- had been lent is required to be accepted even in these proceedings. 26. It is also to be noticed here that respondents, though served, did not appear before this Court to support the judgment of the Trial Court and the Appellate Court. The contention of the appellant that the judgment rendered by this Court in Crl.RP No.2204/2020 has been accepted by the respondents has gone undisputed. 27. In the light of the above, it would not be proper to sustain the finding of the Trial Court as well as the Appellate Court that a loan amount of Rs.15,000/- had been given to the plaintiff and that it was entitled to repay the said sum with interest at 16%. 28. Thus, the question of law framed in this appeal is held in favour of the defendants/appellants and it is held that the finding recorded in CrRP No.2204/2020 as regards the actual amount lent as a loan will have to be accepted. Consequently, the decree of the Trial Court as well as the Appellate Court cannot be sustained. 29. Since the entire amount awarded as compensation in CrRP No.2204/2020 has been deposited, no further sum would be required to be paid to the plaintiff by the defendants, since it is the mandate of the S. 357 (5) of the Criminal Procedure Code that any sum ordered to be paid as fine in a Criminal proceeding, would have to be taken into account in any subsequent civil suit relating to the same matter. 30. 30. As noticed above, this Court in CrRP No.2204/2020 has given a finding that only a sum of Rs.3,000/- was given as loan and had directed compensation of Rs.10,000/- to be paid to the Plaintiff herein. The payment of this sum of Rs.10,000/- would thus amount to a discharge of the entire loan and the plaintiff would not be entitled to any further sums. The judgments and decrees of the Trial Court are thus set aside and the suit is dismissed. 31. The appeal is accordingly allowed. In view of the disposal of the appeal, IA.No.1/2014 does not survive for consideration.