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2022 DIGILAW 506 (MAD)

K. Ramakrishnan v. P. Kandasamy

2022-03-01

R.VIJAYAKUMAR

body2022
JUDGMENT (Prayer: Second Appeal is filed under Section 100 of C.P.C, to set aside the judgment and decree of the lower Appellate Court dated 26.10.2017 passed in A.S.No.47 of 2018 on the file of the VI Additional District Court, Madurai, modifying the judgment and decree of the trial Court dated 23.06.2017 passed in O.S.No.713 of 2015 on the file of the Principal Subordinate Court, Madurai.) 1. The defendant is the appellant. 2. The plaintiff filed O.S.No.713 of 2015 before the Principal Subordinate Court, Madurai for recovery of money of Rs.2,50,000/- along with interest at the rate of 24% per annum based upon a pro-note said to have been executed by the defendant on 10.10.2012. The suit was dismissed by the trial Court. The plaintiff filed A.S.No.47 of 2017 before the VI Additional District Court, Madurai. The learned District Judge was pleased to reverse the judgment and decree of the trial Court and granted a decree in favour of the plaintiff. As against the same, the present second appeal has been filed by the defendant. 3. The plaintiff has contended that he is doing pawn broker business and money lending business and he is having license for doing the said businesses. According to the plaintiff, the defendant approached the plaintiff on 10.10.2012 and borrowed a sum of Rs.2,50,000/- for construction of a house. After receipt of the said amount, the defendant had executed the suit pro-note in favour of the plaintiff accepting to pay interest at the rate of 24% per annum. The defendant had also entrusted his original sale deed dated 15.02.2005. 4. According to the plaintiff, the defendant had failed to pay the interest or the principal amount and due to the plaintiff. Hence, the present suit for recovery of money. 5. The defendant filed a written statement contending that he had borrowed only a sum of Rs.50,000/- in the year 2010 to clear his sundry debts. At the time of borrowal, the plaintiff demanded exorbitant interest, but the defendant has no other way than to accept the said rate of interest. At the time of borrowal, the defendant signed in a blank pro-note and in a blank twenty rupees stamp paper. That apart, the plaintiff had demanded to produce more security and hence, the defendant deposited his original title deeds to the plaintiff on the same day. 6. At the time of borrowal, the defendant signed in a blank pro-note and in a blank twenty rupees stamp paper. That apart, the plaintiff had demanded to produce more security and hence, the defendant deposited his original title deeds to the plaintiff on the same day. 6. The defendant further contended that he approached the plaintiff for reducing the interest rate, but the plaintiff refused to do so. Thereafter, the defendant settled the entire principal amount of Rs.50,000/- to the plaintiff along with interest. However, demanding more interest, the plaintiff refused to return the original title deed, pro-note and a blank twenty rupees stamp paper. The plaintiff started to give pressure to the defendant to register the property mentioned in the title deed deposited by the defendant. The plaintiff along with his henchmen threatened the defendant on 27.05.2015. Hence, he was forced to lodge a complaint as against the plaintiff before the police station. According to the defendant, the plaintiff had filled up the pro-note according to his whims and fancies. The defendant further contended that the suit pro-note was given by him in the year 2010 which cannot be used by the plaintiff to file a suit in the year 2015. According to the defendant, the suit is barred by limitation. 7. The trial Court after considering the oral and documentary evidence, came to the conclusion that the pro-note is surrounded by various suspicious circumstances. One of the witnesses of the said pro-note was examined as DW2 on the side of the defendant. He had deposed that the defendant had borrowed only Rs.50,000/- and that too in the year 2010 after signing a blank pro-note. Based upon the said deposition of DW2 and also on the ground that the plaintiff had not produced his account book to establish the disbursal of the loan in the year 2012, the trial Court dismissed the suit. 8. The First Appellate court found that the money lender license is not in the name of the plaintiff. The plaintiff has categorically stated that he maintained the account books only for the loan amount, for which he is collecting daily interest. He is not maintaining any account book for the loan amount which carry monthly interest. 8. The First Appellate court found that the money lender license is not in the name of the plaintiff. The plaintiff has categorically stated that he maintained the account books only for the loan amount, for which he is collecting daily interest. He is not maintaining any account book for the loan amount which carry monthly interest. When the plaintiff is not duty bound to maintain any account book, the trial Court had erroneously non-suited the suit on the ground of non-production of the said account book. The First Appellate court further found that if really the defendant had repaid the loan amount in the year 2010 itself, he would have been taken steps to get back the original document submitted by him. When the defendant has admitted his execution, the statutory presumption under Section 118 of Negotiable Instrument Act follows and the entire burden is only upon the defendant to establish that he has not borrowed Rs.2,50,000/- in the year 2012. That apart, when the defendant pleads that he had signed in a blank pro-note, he has given permission to fill it up as per Section 20 of the Negotiable Instrument Act. Based upon the said findings, the First Appellate Court set aside the judgment and decree of the trial Court and decreed the suit. As against the same, the defendant has filed the above second appeal. 9. The second appeal has been admitted on the following substantial questions of law: “1. Whether in law the lower Appellate Court is right in overlooking the aspect that the appellant has rebutted the presumption under Section 118 of Negotiable Instrument Act by examining the attesting witness D.W.2? 2. Whether in law the lower Appellate Court was right in holding that the respondent has no obligation to maintain accounts book under Section 9 of the Tamil Nadu Money Lenders Act, 1957? 3. Whether in law in the lower Appellate Court is right in not drawing adverse inference against the respondent for not producing the account book relating to the relevant point of time after admitting that he was maintaining accounts book? 4. Whether in law is not Ex.A.1 unenforceable since it offends Sections 3 and 4 of Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 and it is also hit by Section 23 of Indian Contract Act?” 10. 4. Whether in law is not Ex.A.1 unenforceable since it offends Sections 3 and 4 of Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 and it is also hit by Section 23 of Indian Contract Act?” 10. The learned counsel for the appellant contended that the defendant has discharged the burden and has established that there is no borrowal from the plaintiff in the year 2012. According to the learned counsel for the appellant, one of the attestors of Exhibit A1 pro-note has been examined as DW2 and he has categorically deposed that the plaintiff had borrowed only a sum of Rs.50,000/- and that too in the year 2010 and signed in the blank pro-note. The deposition of DW2 has not been discredited in the cross examination. The plaintiff has examined only the scribe to prove that the alleged suit pro-note was executed in the year 2012 and a sum of Rs.2,50,000/- was borrowed under the said document. 11. The learned counsel for the appellant further contended that a sum of Rs.1,30,000/- was sanctioned by the local body under Urban Housing Development Scheme in the year 2009 for construction of a house. The defendant has completed the construction even in the year 2010 itself. Hence, the contention of the plaintiff that a sum of Rs.2,50,000/- was borrowed in October-2012 for construction of house property is not factually correct. 12. The learned counsel for the appellant further contended that the defendant had repaid the entire principal amount along with interest that was borrowed in the year 2010. The plaintiff was retaining the original document and the pro-note demanding more interest. The plaintiff had also used his muscle power to threaten the defendant. Hence, the defendant was forced to lodge a police complaint on 27.05.2015. The plaintiff had appeared before the police station and agreed to settle the matter before the Civil Court. Only thereafter, the present suit has been filed on 08.07.2015. According to the learned counsel for the appellant, the sequence of the dates and events will clearly establish the loan transaction was in the year 2010 and not in the year 2012. He further contended that the First Appellate Court had erred in holding that the plaintiff need not produce any account book for lending of the loan amount when he is not a money lender. Hence, he prayed for allowing the second appeal. 13. He further contended that the First Appellate Court had erred in holding that the plaintiff need not produce any account book for lending of the loan amount when he is not a money lender. Hence, he prayed for allowing the second appeal. 13. Per contra, the learned counsel for the respondent contended that only the plaintiff's wife is the money lender and hence, there is no license in the name of the plaintiff. When the plaintiff is not having a money lender license, he is not statutorily bound to maintain the account book or document for lending and receipt of interest. The trial Court has erroneously placed the burden upon the plaintiff and dismissed the suit. He further contended that when the defendant has admitted the execution of the suit pro-note, the entire burden is upon the defendant to establish that the borrowal was not in 2012, but in 2010. The defendant is also bound to prove that he had borrowed just Rs.50,000/- and not Rs.2,50,000/- in the year 2010. When the burden of proof is upon the defendant, the defendant has not discharged the said burden. 14. The learned counsel for the respondent further contended that DW2 is a regular borrower from the plaintiff and in view of some enmity, he had deposed as against the plaintiff and the same has also admitted in the cross examination of DW2. Hence, the evidence of DW2 cannot be relied upon to non-suit the plaintiff. He further contended that the First Appellate Court after careful analysis of oral and documentary evidence has reversed the judgment and decree of the trial court and granted a decree in favour of the plaintiff. The learned counsel for the respondent further contended that no substantial question of law arises in the second appeal to warrant interference under Section 100 of C.P.C, by this Court. Hence, he prayed for dismissal of the second appeal. 15. I have considered the submissions made on either side. 16. It is the specific case of the plaintiff that the defendant had borrowed a sum of Rs.2,50,000/- on 10.10.2012 for construction of a house by executing the suit pro-note on the said date. The plaintiff has contended that on the same day, the defendant has deposited some original title deeds with him. 16. It is the specific case of the plaintiff that the defendant had borrowed a sum of Rs.2,50,000/- on 10.10.2012 for construction of a house by executing the suit pro-note on the said date. The plaintiff has contended that on the same day, the defendant has deposited some original title deeds with him. On the other hand, the defendant contends that he had borrowed only a sum of Rs.50,000/- from the plaintiff and that too in the year 2010. According to the defendant, he had discharged the entire sum of Rs.50,000/- along with interest, but the plaintiff had retained the original title deeds demanding more interest from the defendant. Using the said blank pro-note, the plaintiff has filed the present money suit demanding Rs. 2,50,000/-. 17. The contention of the defendant that he had borrowed a sum of Rs.50,000/- in the year 2010 is admitted by the plaintiff during his cross examination as PW1. However, the plaintiff had contended that on receipt of the said Rs.50,000/-, he had teared and returned the pro-note to the defendant. According to the plaintiff, the suit pro-note is a fresh transaction on 10.10.2012 for construction of a house property. The scribe of the document has been examined as PW2 on the side of the plaintiff. Though there are two witnesses to Exhibit A1 pro-note, one of the witnesses had passed away and other witness namely one Marimuthu has been examined as DW2 on the side of the defendant. 18. According to the deposition of DW2, the defendant had borrowed only Rs.50,000/- and that too in the year 2010. This deposition of DW2 was sought to be discredited by the plaintiff by suggesting that there is some enmity between the plaintiff and DW2. A perusal of cross examination of DW2 will disclose that DW2 is a regular borrower from the plaintiff and the alleged enmity suggested by the plaintiff is that since DW2 made delayed payment, the plaintiff had stopped giving him loan and that is the enmity between DW2 and the plaintiff. This kind of suggestion regarding enmity is not believable in the circumstances of the case. 19. In Para No.4 of the plaint, the plaintiff has admitted that he is doing pawn broker business and money lending business and he is having license for doing the above said business. This kind of suggestion regarding enmity is not believable in the circumstances of the case. 19. In Para No.4 of the plaint, the plaintiff has admitted that he is doing pawn broker business and money lending business and he is having license for doing the above said business. While giving evidence, the plaintiff has suddenly changed his stand and deposed that he is having license only for pawn broker business and not for money lending business. Such an evidence is quite contrary to the pleadings of the plaintiff in paragraph No.4 of the plaint. The plaintiff has chosen to produce Exhibits A5 and A6 licenses for pawn broker and money lending business. It is true that the pawn broker license stands in the name of the plaintiff and the money lending license stands in the name of his wife. Both these documents namely Exhibits A5 and A6 relate to the period between October 2003 to 31.03.2004. The suit pro-note said to have been executed by the defendant in favour of the plaintiff on 10.10.2012. The plaintiff has not chosen to produce any license for the period relevant to the suit pro-note. 20. When the plaintiff has pleaded that he is having money lender license, he is statutorily bound to maintain account book relating to lending and payment of interest by borrowers. The plaintiff has not chosen to produce those account books. During the cross examination, the plaintiff has admitted that the lending of Rs.2,50,000/- to the defendant is reflected in his income tax returns and he could produce the same, but the plaintiff has not chosen to produce his income returns reflecting the loan transaction. The Court has to necessarily draw adverse inference as against the plaintiff for non-production of the account book under the Money Lenders Act and income tax returns of the plaintiff. 21. The plaintiff had further contended that the defendant had borrowed Rs.2,50,000/- for construction of a house in the year 2012, but the defendant has produced Exhibit B1 which is the sanctioning order under Urban Housing Development Scheme for construction of a house and the said order is dated 27.02.2009. As per the clause in Exhibit B1, the construction has to be completed within a period of three months. As per the clause in Exhibit B1, the construction has to be completed within a period of three months. The defendant contended that he has completed the construction in the year 2010 itself and there is no necessity for him to borrow money for construction of a house in the year 2012 under the suit pro-note. 22. The defendant had further contended that the plaintiff had retained the original document and the pro-note even after discharging of the loan amount, demanding more interest. The plaintiff had created some problem in the house of the defendant on 27.05.2015 and hence, a police complaint has been lodged under Exhibit B2 on 27.05.2015 and a receipt has been issued by the police on 30.05.2015 under Exhibit B3. The plaintiff has appeared before the police and agreed not to harass the defendant with regard to money transaction and he will settle the issue through Court. The said statement of the plaintiff has been marked as Exhibit A3 dated 30.05.2015. The present suit for recovery of money has been filed on 08.07.2015 by the plaintiff. The above narrated sequence of events will probabilise the case of the defendant that the plaintiff was retaining the original documents, demanding higher interest, entered the house of the defendant in May 2015 and created law and order problem. 23. The learned counsel for the appellant had contended that once the defendant has admitted the execution of the suit pro-note, the burden is upon the defendant to disprove that no amount was borrowed on 10.10.2012, as per Section 118 of the Negotiable Instrument Act. The above narrated factual events coupled with the evidence of one of the attestors of the suit pro-note(DW2) will clearly show that the defendant has discharged his burden of proof. Since the defendant has proved contrary, the plaintiff can no longer rely upon the presumption as enumerated under Section 118 of the Negotiable Instrument Act. The deposition of DW2 which has not been discredited in the cross examination will clearly prove that only Rs.50,000/- was received by the defendant and that too in the year 2010. Hence, the First Appellate Court was not correct in invoking Section 118 of the Negotiable Instrument Act. 24. The deposition of DW2 which has not been discredited in the cross examination will clearly prove that only Rs.50,000/- was received by the defendant and that too in the year 2010. Hence, the First Appellate Court was not correct in invoking Section 118 of the Negotiable Instrument Act. 24. In view of the above said discussion, the substantial questions of law are answered as follows: (i) The First Appellate Court had erred in overlooking the fact that the defendant had rebutted the presumption under Section 118 of Negotiable Instrument Act. (ii) When the plaintiff has admitted that he is having money lender license in the plaint, the First Appellate Court was not right in holding that the plaintiff need not maintain the account book under Section 9 of Tamil Nadu Money Lenders Act, 1957. (iii) The First Appellate Court erred in not drawing adverse inference as against the plaintiff for not producing the account book after admitting that he was maintaining the account book. (iv) The plaintiff has proved that he has paid the entire principal amount along with interest for the pro-note executed by him in the year 2010 and hence, the present pro-note retained by the plaintiff demanding higher interest offends under Sections 3 and 4 of Tamil Nadu Prohibition of Charging Exorbitant Interest Act 2003. 25. In view of the above said discussion, all the substantial questions of law are answered in favour of the appellant. The second appeal is allowed. The judgment and decree of the First Appellate Court is set aside. The judgment and decree of the trial Court is restored. No costs.