THE HON’BLE SRI JUSTICE B. CHANDRA KUMAR Appeal Suit No. 4102 of 2003 Judgment: This appeal suit is filed by the first defendant being aggrieved by the judgment and decree dated 26.02.2003 passed in O.S. No.586 of 1996 by the learned I Additional Senior Civil Judge, R.R. District, at L.B. Nagar. The parties hereinafter will be referred to as they are arrayed before the lower Court for the sake of convenience. The plaintiff is a company doing chit fund business. The first defendant joined in the chit series SP21ZS-40 in October 1995 for a chit value of Rs.1,00,000/- payable in 40 monthly instalments at Rs.2,500/- each. He executed a chit agreement on 30.10.1995. He participated in the auction of the chit conducted on 17.03.1996 and became the successful bidder having agreed to forego an amount of Rs.40,000/-. The first defendant furnished guarantors who jointly executed an agreement of guarantee in favour of the plaintiff company agreeing to pay the due amount by the first defendant. Since the first defendant paid Rs.17,500/-, they executed the guarantee agreement for Rs.82,500/- being the entire amount of future instalments and agreed to pay 12% interest per annum in case of default. The first defendant was paid Rs.54,125/- by way of cheque No.836154 on 04.05.1996 and Rs.5,875/- vide receipt No.A1895 on 04.05.1996. The first defendant committed default in payment of instalments from 04.05.1996. The plaintiff having issued a legal notice on 13.09.1996 filed the suit for recovery of total amount of Rs.86,584/- which includes incidental charges, legal notice charges and interest. The first defendant filed a written statement and denied the material allegations made by the plaintiff. However, he admitted that he joined as subscriber in chit No.SP21ZS-40 for a sum of Rs.1,00,000/- on a monthly subscription of Rs.2500/- for 40 months. His specific case is that he had participated in the chit auction held on 21.01.1996 and he became the successful bidder after agreeing to forego Rs.35,000/- and other incidental expenses, if any. His specific case is that he had not participated in the chit auction alleged to have held on 17.03.1996. He further admitted that he has produced the sureties to the plaintiff company, but his case is that at the instance of the plaintiff’s representative, he and other guarantors have signed on the blank printed forms and white papers. His further case is that, owing to his compelling financial stringency and as he was in need of money to meet the medical expenses of his daughter who suffered multiple fractures in an accident, he signed on all those papers and printed forms. He has specifically denied that an account payee cheque No.836145, dated 04.05.1996 was issued to him in full satisfaction of the prize amount due from the plaintiff. His case is that the theory of paying him amount through cheque is a fabrication to cheat him. His specific case is that he paid instalments up to January 1996 and he never paid instalments till May 1996 as alleged by the plaintiff. His specific case is that he got issued a legal notice dated 18.03.1996 demanding the plaintiff to pay the prize money and that no reply was given to the said notice. He has specifically denied that he had encashed the said cheque from Mahesh Co-operative Bank. It is also his case that he had approached the District Consumer Grievances Redressal Forum, R.R. District. It is also his case that the plaintiff may be directed to produce all the relevant bank records and that the Bank Manager may be summoned to prove the allegations made by the plaintiff. It is also his case that he has also lodged a complaint to the Registrar of Chits about the non-payment of prize amount. However, the Registrar of Chits also adopted the same theory falsely put forth by the plaintiff. It is also his case that he had not withdrawn the prize amount as alleged by the plaintiff and the plaintiff had utilized the blank papers on which his signatures were obtained. The other defendants have also filed written statement and their main case is that their signatures were obtained on blank printed forms and papers on the ground that it is only a formality. The lower Court framed the following issues. 1. Whether the plaintiff company obtained the signatures of the defendant on blank papers? 2. Whether the defendant No.1 is the defaulted prized subscriber? 3. Whether defendant Nos.2 to 5 are the sureties of defendant No.1? 4. Whether the suit claim is true and correct? 5. Whether defendant Nos.1 to 5 are jointly liable for suit claim? 6. To what relief. On behalf of the plaintiff, PWs.1 and 2 were examined and Exs.A1 to A11 were marked. On behalf of the defendants, DWs.1 and 2 were examined and Exs.B1 to B9 were marked. The lower Court, on appreciation of oral and documentary evidence, came to the conclusion that the first defendant did not take any steps to summon the cheque and to send the same for comparison of his signature to disprove the contention of the plaintiff and that the burden lies on him to prove that the consideration was not passed to him under Ex.A6 promissory note and, therefore, the plaintiff proved the case and, accordingly, decreed the suit. Sri P. Damodar Reddy, learned counsel for the appellant/first defendant, submitted that the appellant joined as a member of chit in October 1995 and that he agreed to forego Rs.40,000/- out of Rs.1,00,000/- and furnished the sureties, singed on the bond and other papers, but the plaintiff failed to pay the prize amount and, in view of the same, the first defendant got issued a legal notice on 18.03.1996 and PW.1 admitted that the plaintiff had received the said notice and, admittedly, no reply was given to the notice. His further submission is that, in the above circumstances, the first defendant approached the District Consumer Grievances Redressal Forum and before the said Forum the plaintiff has taken a stand that the first defendant had become successful bidder on 17.03.1996 and that the prize amount was paid to him through a cheque. His main submission is that normally the chit fund companies have to issue crossed cheques and not bearer cheques and the theory put forth by the plaintiff that they issued bearer cheque and same was withdrawn by the first defendant is utterly false and the plaintiff has failed to prove the same. It is also his submission that the contrary stands taken by the plaintiff before the Consumer Forum as well as the Registrar of Chits were not taken into consideration by the lower Court. Sri V. Raghu, learned counsel for the first respondent/plaintiff, supported the judgment of the lower Court and submitted that the documents filed by the plaintiff clinchingly establish that the first defendant had executed a bond and furnished sureties and then the plaintiff issued him a cheque and that the first defendant had withdrawn the said amount through the bank and, therefore, the plaintiff has proved its case and there is nothing to interfere with the well reasoned judgment passed by the lower Court. The only point that arises for consideration is whether the first defendant had withdrawn the cheque amount? It is not in dispute that the first defendant joined as a member of chit bearing No.SP21ZS-40. Ex.A3 is the chit agreement dated 30.10.1995. Ex.A4 is the bid offer form dated 17.03.1996. Ex.A5 is the agreement of guarantee dated 04.05.1996. Ex.A6 is the promissory note dated 04.05.1996. Ex.A7 is the cash voucher dated 04.05.1996. This cash voucher reveals that the cheque bearing No.836154 for Rs.54,125/- was prepared. Ex.A8 is the legal notice issued on behalf of the plaintiff. Ex.A8 only shows that the first defendant had withdrawn the prize amount on 04.05.1996. However, the mode of payment is not mentioned in the said notice. Ex.A9 is the reply notice got issued by the first defendant, wherein he had reiterated his stand that he was the successful bidder only in the month of January 1996. It also reveals that the first defendant joined as member of two chits bearing Nos.SP21ZS-30 and SP21ZS-40 and the value of said two chits is Rs.1,00,000/- and Rs.1,00,000/- respectively, and the monthly subscription amount of each chit is Rs.2500/- payable in 40 monthly instalments. Ex.B1 is the Xerox copy of passbook. It only shows that the first defendant had paid chit instalments till January 1996. Ex.B2 is the legal notice dated 18.03.1996 issued on behalf of the first defendant. In Ex.B2, the first defendant had categorically asserted that he had participated in the auction of the chit reference No.SP21ZS-40 in the month of January 1996 and became the successful bidder and that though he had signed on necessary papers and the plaintiff obtained the signatures of the sureties on the blank printed forms and white papers, the plaintiff failed to pay the prize amount to him. Admittedly, no reply was given to Ex.B2 notice. It is also an admitted case that the plaintiff has received the said notice. PW.1 admitted that on 18.03.1996 the first defendant sent a notice. This creates a doubt as to whether the first defendant had participated in the auction held on 17.03.1996. If at all the first defendant had participated in the auction held on 17.03.1996, he would not have issued a legal notice on the very next day i.e., on 18.03.1996. The lower Court failed to consider this important aspect. Ex.B4 is the counter filed by the plaintiff before the District Consumer Forum, R.R. District. The case of the plaintiff is that the first defendant had withdrawn the legal notice dated 18.03.1996, vide letter dated 28.04.1996 and, therefore, he was paid the amount on 04.05.1996. It is also the case of the plaintiff that as the first defendant requested to pay the entire amount without adjusting the bid amount to the other chit, he was paid entire amount on 04.05.1996. The further case of the plaintiff is that since the first defendant did not pay the instalments with regard to other chit No. SP21ZS-30, his membership was removed from that chit and that the first defendant is entitled to receive Rs.2357/- in respect of that chit. The first defendant also lodged a complaint to the Registrar of Chits on 20.08.1996 reiterating his allegation that he was not paid the prize amount. Ex.B7 is the counter filed by the Registrar of Chits before the District Consumer Forum, wherein the Registrar of Chits has contended that the plaintiff had informed him that the first defendant was paid Rs.54,125/- through account payee cheque No.836154, dated 04.05.1996 drawn on A.P. Mahesh Co-operative Bank, Lingampally Branch, Hyderabad, after deducting an amount of Rs.5,875/- towards subscription for the months of February, March and April 1996. Thus, it is clear that the first defendant did not pay subscriptions for the months of February, March and April 1996 and this supports the version of the first defendant that he had paid subscriptions only till January 1996. When the first defendant was not paying the subscriptions from January 1996 onwards, it creates a reasonable doubt as to how he was allowed to participate in the auction held on 17.03.1996. However, the plaint averments does not show that this amount of Rs.5,875/- was adjusted towards the subscriptions for the months from February to April 1996, rather it shows that the first defendant was paid Rs.54,125/- by way of cheque No.836154 and Rs.5,875/- by receipt No.A1895. Admittedly, the said receipt is not filed before the Court. Even as seen from the ledger in Ex.A10, the chit amounts were paid till January 1996 regularly and the subscriptions for the months of February, March and April 1996 were paid on 04.05.1996. When the first defendant had specifically denied that the cheque bearing No.836154, dated 04.05.1996 was handed over to him or that he had withdrawn the amount through that cheque from A.P. Mahesh Co-operative Bank, Lingampally, Hyderabad, the burden does not shift to the first defendant and the initial burden still lies on the plaintiff. Admittedly, the plaintiff did not whisper in the plaint or in the earlier notice that account payee cheque was issued to the first defendant. Normally, account payee cheques would be issued to the successful bidders. In the above circumstances, the burden lies on the plaintiff to take steps to summon the cheque said to have been signed by the first defendant in the bank at the time of encashing the cheque or any other bank record, since there is no satisfactory evidence to show that the cheque was handed over to the first defendant and that he himself had encashed the cheque in the bank. Moreover, the evidence of the Bank Manager, who is examined as DW.2, is not clear on this aspect. According to DW.2, the plaintiff’s company is having current account in their bank, vide Account No.120. He says that the plaintiff’s company issued a open bearer cheque No.836154, dated 04.05.1996 in the name of the first defendant drawn on their bank. According to him, the procedure is that whenever the bearer cheque is presented for encashment, the concerned clerk would obtain the signature of the person presented the cheque on the back side of the cheque and then only he would make payment. He admitted that the plaintiff company did not identify the signature of the first defendant on the back side of the cheque. He says that as per the procedure there is no need to identify the signature of the person by cheque issuing authority. According to him, the open bearer cheque means it can be encashed across the counter, with the signature of the person in whose name the cheque is issued. Therefore, the important question that still remains to be answered is as to who had identified the person who presented the cheque in the bank, of course in the name of the first defendant. Initially, DW.2 has deposed that the first defendant is not having account with their bank, but, subsequently, he deposed that he cannot say whether the first defendant is having account in their bank or not. He further deposed that he cannot say whether the signature on the back side of the cheque is that of the first defendant or forged. It has to be seen that the first defendant in his written statement has categorically stated that the plaintiff should take steps to summon all the records from the bank to prove that the amount was withdrawn by him through the cheque issued by the plaintiff. Learned counsel for the appellant/first defendant also submitted that in fact on the application of the first defendant, the lower Court directed the Manager of the A.P. Mahesh Co-operative Bank, Lingampally, Hyderabad, to produce all the relevant records including the cheque, but DW.2 did not choose to produce the cheque before the trial Court in collusion with the plaintiff. Admittedly, the cheque was not produced before the lower Court. The lower Court failed to consider the circumstances that it is the first defendant, who has initially issued the legal notice to the plaintiff on 18.03.1996 alleging that he became the successful bidder in the auction held in January 1996, but he was not paid the prize amount and that the plaintiff did not give any reply to the said notice. The lower Court also failed to consider that normally account payee cheques would be issued to the successful bidders, but in this case a bearer cheque was issued, that too after a considerable period after the first defendant issued a legal notice to the plaintiff. The lower Court also failed to consider that the plaintiff had taken a false plea before the Registrar of Chits that the first defendant was paid a sum of Rs.54,125/- through account payee cheque, but in reality it was not an account payee cheque, but it was only a bearer cheque. It also appears that if at all the first defendant had withdrawn the amount through the cheque issued by the plaintiff he would not have made complaints to the Consumer Forum, Registrar of Chits and to the other authorities and this circumstance also shows that there is some truth in the allegations made by the first defendant. The Courts have to consider all the facts and circumstances for drawing rational conclusions. It also appears that there is some truth in the argument of the learned counsel for the first defendant that the chit fund companies normally obtain the signatures on the blank printed forms and white papers to make use of the same to suit their case. All these circumstances create a suspicion with regard to claim of the plaintiff and in all probabilities the theory put forth by the first defendant appears to be correct. In view of the same, I am of the considered view that the impugned judgment and decree of the lower Court is liable to be set aside. Accordingly, the appeal is allowed and the impugned judgment and decree dated 26.02.2003 passed in O.S. No.586 of 1996 by the learned I Additional Senior Civil Judge, R.R. District, at L.B. Nagar, is set aside with throughout costs. ______________________ B. CHANDRA KUMAR, J. Date: 14th October 2011 Nsr