FIRST APPEAL No. 392 of 1998 Against the Judgment and Decree dated 27.02.1998 passed by Sri Parmeshwar Chaudhary, Sub Judge-VIth Motihari in Title Suit No.32 of 1994 / 10 of 1994. ------- SYED AHMAD & ANR. ------------Plaintiffs-Appellants Versus BIHAR STATE FINANCIAL CORPORATION & ANR. ------------Defendants-Respondents For the Appellant – Mrs.Saba Ashfaque, Advocate For the Respondent – Sri Partha Sarthy, Advocate Dated 28th day of July, 2010. P R E S E N T HON'BLE MR. JUSTICE MUNGESHWAR SAHOO ------------- J U D G M E N T Mungeshwar Sahoo, J. (1) This Firs Appeal has been field by the plaintiffs against the Judgment and Decree dated 27.02.1998 passed by the learned Sub Judge VIth Motihari in Title Suit No.32 of 1994 / 10 of 1994 dismissing the plaintiff / appellant suit. (2) The plaintiffs-appellants filed the aforesaid Title Suit No.32 of 1994 / 10 of 1994 praying for declaration that defendant No.1 has no claim of money in relation to M/s Dharman Singh Ice Cold Storage, Chauradano against the plaintiff and also prayed for recovery of Rs.4,65,600/- with interest at the rate of 12 per cent per annum. (3) The plaintiffs claimed the aforesaid relief on the facts alleging that they wanted to start cold storage business and for the said purpose, they had 3 lakhs money with then but it was not sufficient so they approached the defendants for advancing loan. The defendant after considering the plaintiff’s case proposes that on 25.09.1972, M/s Dharman 2 Singh Ice Cold Storage was established at Chauradanoat the cost of Rs.3,28,000/- but now it is sick and is lying idle. Thus, the defendant No.2 allured the plaintiff to purchase the said cold storage and assured plaintiff to provide financial assistance. The plaintiffs had only approached for financial assistance but because of their allurement and mis- representation and undue influence, they took M/s Dharman Singh Ice Cold Storage which was not in working condition. The said cold storage was transferred in the name of plaintiffs and the entire outstanding dues in the name of ex-proprietor of the cold storage was shown as loan to the plaintiff which was about Rs8,56,982.30 paise. A sale deed-cum- mortgage deed was executed on 14.04.1989 and by exercising undue influence got the signature of the plaintiff on the said deed. The plaintiff were never given any loan rather they were asked to deposit Rs.1,85,600/- which they deposited. Although the defendants assured the plaintiff to give financial assistance but they did not give and the plaintiffs spent Rs.1 lakh in making the cold storage fit but in vain. The plaintiff spent the said amount only because of assurance of the defendants. The plaintiff suffered a lot. The further case is that the plaintiff have purchased the said cold storage on 15.02.1989 and the name of the cold storage has been changed as Janta Ice Cold Storage. The said cold storage was advertised for sale under Section 29 of the State Financial Corporation Act, 1951 on 15.03.1989. On these grounds, the plaintiff claimed the damages. (4) The defendants-respondents on being noticed appeared and field a contesting written statement. According to them the suit is barred under Section 41 (A) of the State Financial Corporation Act. The plaintiff never approached the defendant either at Motihari or at Patna and the 3 defendants never allured the plaintiff to purchase M/s Dharman Singh Ice Cold Storage, Chauradano nor they assured him to provide working capital for the same. According to the defendants the real fact is that said M/s Dharman Singh Ice Cold Storage, Chauradano was advertised for sale under Section 29 of the State Financial Corporation Act. The plaintiff submitted tender on 15.03.1989 which was approved by the Managing Director of the defendants on 31.03.19879 for Rs.9,27,308.36 paise and the auction sale took place on 31.03.1989 itself. The possession was delivered to the plaintiff. According to the terms and conditions of the sale deed, the plaintiff paid Rs.1,85,600/- and the remaining amount out of 9,27,308.36 paise was treated as term loan which was to be paid by the plaintiffs according to the terms and conditions. IN fact, the sale deed was executed on 15.12.1989 wherein the terms and conditions for payment of balance amount has been described which was accepted by the plaintiffs by their letter dated 11.10.1989. Thereafter plaintiffs filed a petition for loan of Rs.8,98,000/- which was sanctioned by the defendants on 27.09.1991 as rehabilitation loan but the plaintiff did not avail the said loan. On 29.04.1993, the defendants informed the plaintiffs that they are unable to yield any financial assistance under the rehabilitation scheme and that the facilities for financial assistance is possible if the plaintiffs are able to arrange funds from alternative sources and, therefore, they were directed to report about the same but they did not. Then the defendants on 21.05.1993 informed the plaintiffs regarding the claim of Rs.12,35,471.89 paise. But there was no response. Again letter dated 08.07.1993 was sent but no response. The plaintiffs did not pay the outstanding dues. Thereafter by letter dated 04.10.1993, the Managing Director informed the plaintiffs that because of non-compliance, the 4 sanction loan is cancelled and by terms of letter dated 01.11.1993, the plaintiffs were informed that legal action shall be taken accordingly and thereafter on 08.02.1994, notice under Section 29 & 30 of the State Financial Corporation Act, 1951 was served on the plaintiffs for sale of mortgage security by public auction. The defendants are entitled for Rs.13,59,899.33 paise payable by the plaintiffs. In order to avoid this payment, the plaintiffs have filed this suit making wrong allegation. (5) On the basis of the above pleadings of the parties, the learned court below framed as many as 6 issues which are as follows : (i) Is the suit as framed maintainable ? (ii) Have the plaintiffs got any cause of action for the suit? (iii) Is the suit barred by Section 41 (a) of the State Financial Corporation Act, 1951? (iv) Whether the plaintiffs are entitled to any allurement by the defendants to the plaintiffs to purchase M/s Dharman Singh Ice Cold Storage and whether there was any assurance by the defendants to provide working capital to the plaintiffs for running the Unit or the plaintiffs have purchased the Unit theirs own accord? (v) Whether the plaintiffs are entitled to the relief as claimed? (vi) To what reliefs, or relief, if any, are the plaintiffs entitled to? (6) After trial by the impugned Judgment and Decree, the learned Court below found that the loan was advanced to the plaintiffs and the amount claimed in the plaint of Rs.4,65,600/- is bad and the defendants are not liable to pay the plaintiff because Rs.1,85,600/- was deposited as consideration money for purchaser M/s Dharman Singh Ice Cold Storage. The learned Court below also found that there was no 5 allurement. The learned Court below also found that the suit is also barred under Section 41 (A) and 46 (B) of the State Financial Corporation Act, 1951. ON these findings, the learned Court below dismissed the plaintiff suit. (7) The learned counsel for the appellants submitted that the learned Court below has wrongly dismissed the plaintiff suit because the plaintiff adduced reliable evidence regarding allurement and undue influence but the learned Court below did not rely the same. The learned counsel further submitted that the suit is not barred under Section 41 (A) and 46 (B) of the State Financial Corporation Act. The learned counsel further submitted that the learned Court below has misdirected by holding that D.W.7 who is appellant No.2 has entirely admitted the defendant’s case. On these grounds, the learned counsel submitted that the impugned Judgment and Decree are liable to be set aside and the plaintiffs suit be decreed. (8) On the other hand, the learned counsel for the defendants- respondents submitted that there is no question of allurement. According to the learned counsel in fact the ex-proprietor of M/s Dharman Singh Ice Cold Storage did not pay outstanding dues of the Corporation, therefore, under Section 29 & 30 of the Bihar State Financial Corporation Act, 1951, the defendants advertised this unit for sale and the tender of the plaintiffs was approved by the defendants. The defendants were to deposit 1,85,600/- and the remaining amount of Rs.8,56,982.30 paise was shown as term loan in favour of the plaintiffs. The sale deed was executed and the plaintiffs signed the sale deeds. The learned counsel further submitted that considering all these aspects of the matter and the materials available on record, the learned Court below has rightly dismissed the plaintiff suit 6 and, therefore, this Appeal is liable to be dismissed with cost. (9) So far the finding of the learned Court that the suit is barred under Section 41 (A) and 46 (B) of the Bihar State Financial Corporation Act is concerned, the learned counsel admitted the position that the suit is not barred under the said provisions because the said Section prohibits filing of suit against the Officers in their personal capacity and the present suit is against the Corporation. (10) In view of the above submissions of the learned counsels for the parties, the only point arises for consideration is as to whether the plaintiff have been able to prove that they purchased M/s Dharman Singh Ice Cold Storage because of allurement, mis-representation, undue influence and pressure by the defendants and whether the plaintiffs are entitled for the amounts as claimed by them and whether the impugned Judgment and Decree are liable to be set aside. F I N D I N G S (11) The plaintiff case is that they were intending to start cold storage business and because they had only Rs.3 lakhs, they approached the defendants for financial assistance. The defendants allured them to purchase M/s Dharman Singh Ice Cold Storage which was sick for long period and because of their allurement, they purchased the same and invested money but the defendants did not give financial assistance. To prove their case, the plaintiffs, have examined as many as 9 witnesses. P.W.2, Bharat Prasad, P.W.3 Abdul Aziz, P.W.4 Md. Shahid have only stated that M/s Dharman Singh Ice Cold Storage was closed since 20-25 years ago. The plaintiffs approached for financial assistance but the defendants did not give. P.W.1, Md. Suleman has stated that the plaintiff has asked him to start generator after cleaning the same. The said cold 7 storage was closed since 25-30 years ago and all the machines were out of orders. P.W.6 is father of the plaintiff who has deposed according to the pleading of the plaintiff. Such is the evidence of P.W.7 who is plaintiff No.2. P.W.8 has stated that the defendants told the plaintiffs to purchase the cold storage of Chauradano. P.W.9 is Karpardaz of the plaintiffs. (12) From perusal of the evidences of these witnesses, I find no specific evidence regarding allurement or undue influence etc. From perusal of the paragraph 8 of the cross-examination, P.W.6 who is father of plaintiff, it appears that he was knowing about the cold storage from before. He has admitted that he was present at the time of registration. The plaintiff No.2 himself as P.W.7 in paragraph 6 has admitted that they had executed the sale deed and had paid the amount according to the terms and conditions in the sale deed. (13) Exhibit ‘A’ is the sale deed. Exhibit ‘D’ has been proved by the defendants which is the loan application filed by the plaintiffs. In the evidence, the P.W.7 has admitted these documents and also Exhibit ‘E’ and Exhibit ‘F’ which are inventory list prepared by the parties in presence of the Magistrate. In paragraph 15, he has also admitted that the possession of the cold storage was given and the key was handed over to him on 23.03.1989 prior to execution of the sale deed, Exhibit ‘A’. (14) Exhibit ‘1’ shows that the defendants sought the necessary information from the plaintiff so that the loan application could be considered. Exhibit ‘1/A’ shows that the plaintiff failed to complete the terms and conditions and, therefore, by Exhibit ‘L’ the loan was cancelled. The defendants have proved the decision of Advisory Committee which has been marked Exhibit ‘H’. (15) On behalf of the defendants two witnesses have been 8 examined. D.W.1 is Arun Kumar Dutta. He has stated that the said M/s Dharman Singh Ice Cold Storage was advertised for sale and the plaintiffs field application for the same. The application has been proved as Exhibit ‘B’. He has further stated that the application of the plaintiff was accepted. This witness has proved the acceptance order which has been marked as Exhibit ‘G’. He has also stated that at the time of purchase the value of cold storage was more than 9 lakhs and according to the terms, the plaintiffs were required to deposit only 20 per cent and they deposited 1,85,600/- and the rest amount was treated as term loan. The plaintiff did not fulfill the terms and conditions of the loan stipulated in the sale deed. D.W.2 was the employee of Corporation. (16) These are the only evidences available on record. From the discussion above, it is clear that the defendants advertised the unit, i.e., M/s Dharman Singh Ice Cold Storage for sale under Section 29 and 30 of the Bihar State Financial Corporation Act. The plaintiffs field tender which was accepted by the defendants and the inventory was prepared and thereafter terms and conditions were settled and the key was handed over and possession was delivered in favour of the plaintiff prior to execution of sale deed Exhibit ‘A’. According to the terms and conditions as mentioned in the sale deed, 20 per cent was required to be deposited by the plaintiffs and, therefore, the plaintiffs deposited 1,85,600/- and the remaining amount was treated as term loan. The plaintiffs were required to pay back, the said loan according to the terms and conditions as mentioned in the sale deed, but they did not. According to the plaintiffs, they invested Rs.1 lakh but the cold storage could not be started. Now, therefore, it appears that because of incapacity of the plaintiffs, the cold storage could not be started. They have not produced anything to show that how they 9 invested Rs.1 lakh and for that one witness has been examined who has deposed to the effect that he has gone to start generator. As discussed above, it further appears that the plaintiff and their father even were knowing about the said cold storage from before and they inspected the cold storage and also inventory was prepared in presence of the Magistrate and the parties and they took possession, thereafter sale deed was executed. In such circumstances, it appears that the plaintiff purchased the property with open eyes and, therefore, now cannot be allowed to turn around and say that because of allurement and undue influence, they invested the money. (17) From the above discussion, I find no reliable evidence regarding allurement, undue influence, mis-representation. The plaintiff have failed to prove the allegation made by them. I also find that because of the incapacity of the plaintiffs, they could not re-start the cold storage and also because of their non-fulfillment of the terms and conditions, they could not avail the loan sanctioned by the Corporation, so they are not entitled for any relief in the present suit. The findings of the learned Court below on these points, therefore, cannot be interfered with and accordingly the findings are confirmed. (18) In the result, I find no merit in this First Appeal and accordingly, this First Appeal is dismissed. In the facts and circumstances of the case, there shall be no order as to cost. Patna High Court, Patna Dated 28 th ,July, 2010 AFR/ Sanjeev (Mungeshwar Sahoo, J.)