Dismissed

Gandey Sravan Kumar v. Smt. Pabba Nagamani

Telangana HC23 Sept 2011CCCA/77/2003

Case brief

AI extract

What is this about?

This court dismissed the civil appeals filed by defendants against a money decree. The court found the defendants failed to rebut the presumption of consideration under Section 118 of the Indian Evidence Act regarding promissory notes and bankers cheques held by plaintiffs.

What did the court decide?

Appeal dismissed; interest on decree modified from 12% to 6% p.a. post-decree.

Gandey Sravan Kumar Vs Smt. Pabba Nagamani — Contract and Commercial Disputes | Telangana HC (2011)

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THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR C.C.C.A..No.77 of 2003 Dated 23-09-2011

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Between:

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Gandey Sravan Kumar and others.

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…Appellants.

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And:

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Pabba Nagamani and others.

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… Respondents. THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR C.C.C.A..No.77 of 2003

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JUDGMENT:

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This appeal is directed against the Judgment dated 26^th November, 2002 passed in O.S.No.122 of 1998 on the file of the 1^st Additional Chief Judge, City Civil Court, Secunderabad.

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Appellants herein are the defendants 1 to 3 and respondents 1 to 3 herein are the plaintiffs and 4^th respondent herein is the 4^th defendant before the Court below. The parties will herein after be referred to as arrayed before the Court below for the sake of convenience.

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The case of the plaintiffs in brief is as follows:

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Plaintiffs 1 and 2 joined two chits with the 3^rd defendant. The 3^rd defendant is a partnership firm and the 2^nd defendant was a partner in it along with one G.Anantha Laxmi, the mother of the 1^st defendant, who died on 4-3-1998. The 3^rd defendant was a registered chit fund company. The plaintiffs were regularly paying the subscriptions since the date of inception of the said chits. They paid in all a sum of Rs.3,70,000/-. The last payment was made on 23-81997. 3^rd plaintiff who is the husband of the 2^nd plaintiff had also given a sum of Rs.1,35,000/- by way of hand loan to the 1st defendant in the month of December, 1997. The 1^st defendant executed three promissory notes and three receipts in favour of the plaintiffs.

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It is their further case that the 1^st defendant, who

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was a bank employee informed the plaintiffs that he would be running the chit business in the names of his sister-inlaw, the 2^nd defendant and his mother one G.Anantha Laxmi. He alone was collecting the chit subscription amounts. While so, the defendants failed to pay the prize amount of the said chits even while the chit period was coming to close. The defendants 1 and 2 were giving some lame excuse even for non-payment of the hand loan of Rs.1,35,000/-. When the plaintiffs insisted them to pay the amounts, the partners of the 3^rd defendant issued 14 post dated cheques. Out of those 14 cheques, 13 cheques were for a sum of Rs.25,000/- each and the last cheque was for a sum of Rs.50,000/-, all drawn on State Bank of India, Market Street Branch, Secunderabad in favour of the plaintiffs 1 and 2. The cheque for Rs.1,35,000/- drawn on Andhra Bank, Marredpaly, Secunderabad was signed by the 1^st defendant. He handed it over to the 3^rd plaintiff. The amount covered by those cheques represents the chit subscriptions and the loan amount given to the 1^st defendant.

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It is their further case that when the plaintiffs wanted to present those cheques for encashment, the defendants 1 and 2 requested them not to present the same as they were not having funds. They also requested the plaintiffs not to take any action. However, they promised to pay the amount after reconstitution of the firm consequent to the death of G.Anantha Laxmi. Thereafter, the 1^st defendant replaced the above cheques by issuing three cheques one each for Rs.one lakh and the fourth one for Rs.1,37,500/-, the aggregate amount being Rs.4,37,500/. The plaintiffs at the request of the 1^st defendant, accepted for replacement of those cheques towards part payment of the amount due. The 1^st defendant in his letter dated 18.5.1998 assured the 3^rd plaintiff that the replaced cheques would be definitely honoured. However, when those cheques were presented by the 3^rd plaintiff, they were dishonoured. When the plaintiffs informed the same, the 1^st defendant requested them not to take any action. In spite of lawyer’s notice and repeated demands, the 1^st defendant evaded even to

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meet the third plaintiff.

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It is their further case that on 23.9.1998 the 1^st defendant sent three bankers cheques for Rs.93,646/-, Rs.2,40,000/- and Rs.1,70,000/- all dated 24.7.1998 requesting the plaintiffs to retain those bankers cheques by way of security and requested them not to take any legal action. He also promised to clear the entire outstanding amount within two days. However, they did not comply. The plaintiffs came to know that there were several creditors demanding payment from the 1^st defendant. The 1^st defendant had already alienated his house property and was trying to dispose of the remaining properties so as to evade payments to the plaintiffs. They removed the name board of the 3^rd defendant company. Defendants 1 to 3 filed a common written statement, while the 4^th defendant remained ex parte, stating that the 1^st plaintiff subscribed for two chits, and 2^nd plaintiff also subscriobed for two chits, the value of each chit being Rs.100,000/- payable in 40 monthly installments of Rs.2500/- each. The chits were commenced in August, 1995 and were closed in November, 1998. The plaintiffs stopped paying the monthly subscriptions after the 32^nd month and committed default in payment of the monthly subscriptions for the last 8 months. Thus, towards each chit, a sum of Rs.20,000/- was not paid. They were also liable to pay Rs.5,000/- under each of the chits towards the company commission. In all, a total sum of Rs.1,00,000/- i.e., Rs.25,000/- under each chit is liable to be deducted from out of the chit value of Rs.1,00,000/-. The 3^rd plaintiff, however, obtained the promissory notes and receipts as one Rambabu was due certain amounts to the 3^rd plaintiff. He made said Rambabu as one of the subscribers to two chits of Rs.1,00,000/- run by the 3^rd defendant. The 3^rd plaintiff wanted to coerce the said Rambabu so as to collect the money due to him. Even before the said Rambabu could become the successful bidder, he wanted to show that he had collected the chit amount from the third defendant,. For that purpose, the 3^rd plaintiff obtained promissory notes from the 1^st defendant representing the prize amount of two chits.

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However, later on said Rambabu collected the prize amount of his two chits and he issued undated cheques for a sum of Rs.80,000/- each representing the amount due towards future installments. However, the said Rambabu did not pay the subscriptions payable to the 3^rd defendant to a tune of Rs.1,60,000/-. The 3^rd plaintiff represented that he would collect the future monthly installments from the said Rambabu and that the 3^rd defendant could deduct Rs.1,60,000/- from the amounts payable in respect of the four chits of the plaintiffs. The 3^rd plaintiff demanded the 1^st defendant to hand over the two cheques issued by Rambabu. When the 1^st defendant asked for the receipts, the 3^rd plaintiff declined, thus the two cheques of Rs.80,000/- each are still lying with the defendants. As the 3^rd plaintiff agreed for adjustment of Rs.1,60,000/- from the amounts payable to the plaintiffs 1 and 2, the cheques were not presented for encashment and the subsequent subscriptions were also not demanded from the said Rambabu. Thus, the three promissory notes and the receipts were brought into existence without making any payments. They were not supported by consideration. There was no occasion for the third plaintiff to advance the amounts to the 1^st defendant as the plaintiffs 1 and 2 themselves were entitled to collect the prize money. In fact the 1^st defendant has nothing to do with the payment of the prize money. The plaintiffs 1 and 2 who committed default in payment of monthly subscriptions are not entitled to the entire amount paid by them.

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The cheque for Rs.1,35,000/- was of the year 1995 and as no amount was payable under the said cheque, the account was closed long back. The promissory notes and the receipts were also obtained undated. As one of the partners died, the cheques issued by the firm could not be presented for encashment and therefore, those 14 cheques were returned to the defendants and fresh cheques were returned to the defendants and fresh cheques were obtained from them in lieu of those earlier cheques. Further the 1^st plaintiff collected Rs.40,000/- on 18-8-1997, Rs.40,000/- on

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15.9.1997 and Rs.50,000/on 5-11-1997 and acknowledged the same. Thus, the 1^st plaintiff collected the total sum of Rs.1,30,000/-. A sum of Rs.1,60,000/was due and payable to the defendants in respect of the two chits payable by the said Rambabu. Thus, the plaintiffs are not entitled for any amount towards chit fund transaction. The defendants did not receive any notice. Only an empty envelope was sent under the certificate of posting. The three bankers cheques have nothing to do with the suit claim. The three bankers cheques were issued by D.Srinivas and D.Shirish representing the sale consideration of a house belonging to the 1^st defendant. Those cheques were not delivered to the 1^st defendant. Three suits were filed for cancellation of those sale deeds and they are pending on the file of the 3^rd Senior Civil Judge, City Civil Courts, Secunderabad. The 3^rd plaintiff had collected the three cheques from Dandu Srinivas. A letter purported to have been issued by the 1^st defendant was fabricated. The 3^rd plaintiff and the said D.Srinivas together manipulated the said letter and instead of giving those cheques to the 1^st defendant, they utilised the same for the purpose of this case. The defendants are not liable to pay the suit amount.

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Basing on the above pleadings, the Court below framed the following issues for trial:

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1. Whether the promissory notes referred to in para 2 of the plaint are not supported by consideration?

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2. Whether the plaintiffs are entitled to the money decree as prayed for?

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3. Whether the plaintiffs are entitled to perpetual injunction against D.4 as prayed for?

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4. To what relief?

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On behalf of the plaintiffs, P.W.1 was examined and Exs.A.1 to A.34 were marked. On behalf of the defendants, D.W.1 was examined and Exs.B.1 to B.4 were marked.

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On consideration of the oral and documentary evidence available on record, the Court below having observed that the defendants failed to show as to how there is the mis-joinder of causes of action or as to how

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the cause of action pleaded in the plaint has effected the merits of the case and that the suit promissory notes i.e.,Exs.A.2 to A.4 and the receipts Exs.A.11 to A.28 are supported by consideration, decreed the suit holding that the plaintiffs are entitled to the money decree as prayed for. The Court below further having observed that the plaintiffs sought for permanent injunction against the 4^th defendant State Bank of India directing them not to encash the three cheques dated 24.7.1998 and as per the order in I.A.No.1577 of 1998 dated 2-11-1998, there was a Court direction for encashment of those bankers cheques and for keeping the amounts in the 4^th defendant bank, held that the issue No.3 “whether the plaintiffs are entitled to perpetual injunction against D4 as prayed for” does not arise for consideration. Accordingly, the Court below decreed the suit with costs as prayed for allowing subsequent interest at12% p.a, from the date of the suit, till the date of realization. Aggrieved by the said judgment, the defendants 1 to 3 preferred the present appeal. Heard the learned counsel and perused the material available on record.

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The learned counsel for the appellants-defendants 1 to 3 argued that the trial Court erred in observing that Exs.A.2 to A.4 are supported by consideration and that the defendants have not rebutted the presumption under Section 118 of the Evidence Act.

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It is also further argued that the plaintiffs failed to produce books of account or statement of account from the business of the 1^st plaintiff to show that he had advanced a loan to 1^st defendant under Ex.A.2. It is further argued that the trial Court failed to consider the plea of D.W.1 that Ex.A.10 has been forged one and the same has been brought into existence in collusion with the vendor of the 1^st defendant. It is also argued that the loan advanced by the 3^rd plaintiff was on two different transactions and the trial Court ought to have dismissed it for separate transaction together and the judgment under revision is liable to be set aside by allowing this revision.

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The learned counsel for the respondents-plaintiffs argued that when the cheques have been issued a

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presumption has to be drawn under Section 118 of the Negotiable Instruments Act and burden lies on the defendants to prove that there is no passing of consideration which the defendants failed to prove. He has taken this Court through the entire evidence and also Exhibits and letters Ex.A.10. He further

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argued that the 1^st defendant has sold his house and his vendee handed over the bankers cheques and that the defendants deposited the cheques with the plaintiffs promising to repay the amount due but subsequently, failed to pay the amount and thus, the bankers cheques came into possession of the plaintiffs and hence, the judgment under revision does not call for any interference by this Court.

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The only point that arises for consideration is: Whether the defendants have proved their case?

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As seen from the evidence, it is not in dispute that the plaintiffs 1 and 2 have joined as members of chits and that they have paid the chit subscription. It is also not in dispute that father of D.1, mother of D.1 and sister of D.1 and 2^nd defendant are the partners of the 3^rd defendant chit fund company. Plaintiff’s case is that P.W.1 gave a hand loan of Rs.1,35,000/- and the 1^st defendant who in turn passed three promissory notes in Exs.A.2 to A.4 and execution of these promissory notes is not in dispute. The contention of the defendants that these promissory notes pertain to the transaction of one Rambabu is rightly negatived by the trial Court. Admittedly, total amount pertaining to the non-payment of future subscription by Rambabu is said to be of Rs.1,60,000/- but total of three promissory notes is Rs.1,35,000/- and therefore, it is clear that the amounts do not tally. Exs.A.6 to A.9 are the cheques issued by D.1.

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The contention of the plaintiffs that Exs.A.11 to A.28 are the receipts issued by the 1^st defendant relating to the chit subscriptions is not in dispute. Exs.A.31 and 32 are the memos issued by the concerned bank showing the dishonour of cheques.

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Ex.A.5 is another letter. This letter is crucial. In this letter, D.1 informed the plaintiffs that he has not received funds except the funds from the sale proceeds of the house and therefore, the payments could not be

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arranged. The whole controversy is with regard Ex.A.10 which reveals that the 1^st defendant has handed over three bankers cheques to the 1^st plaintiff. It is alleged that Ex.A.10 is not genuine. Even if Ex.A.10 is not taken into consideration, the fact remains that three bankers cheques came into possession of the plaintiffs and the contents of Ex.A.5 probablises that it is D.1who had handed over Exs.A.6 to A.9 cheques to P.W.1.

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The 1^st defendant’s case is that his vendor who had to issue the bankers cheque to him, had handed over those cheques to the 1^st plaintiff. Therefore, he had filed a separate suit against the vendor. The burden lies on the defendants to prove that those cheques were handed over to the plaintiffs by his vendor, which they failed to prove.

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In view of the above, I do not see any merits in this appeal and accordingly, this appeal is liable to be dismissed and is accordingly dismissed. No costs.

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However, the decree stands modified as follows: The defendants shall pay interest at 12% p.a., from the date of the suit, till the date of decree and thereafter, at 6% p.a., from the date of the decree, till the date of realization.

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____________________ B. CHANDRA KUMAR, J.

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Date: 23-09-2011 Dvs

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THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR

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C.C.C.A..No.77 of 2003 Dated 23-09-2011

Gandey Sravan Kumar v. Smt. Pabba Nagamani

Case brief

What is this about?

What did the court decide?

Gandey Sravan Kumar v. Smt. Pabba Nagamani

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

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