1 FA.132.91 w xobj.6777.91 ndm IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 132 OF 1991 WITH CROSS OBJECTION (stamp) NO. 6777 OF 1991 1. Mrs. Marina Francis Thanicatt. 2. Francis Thanicatt. ... Appellants Versus Mrs. Grace Devaskayam Dasan. ... Respondent ----- Mrs. A.A.Agarwal for the Appellants. Miss. S.M.Dandekar for the Respondent. ----- CORAM : A.S.OKA, J. DATE : 27 th July, 2011. ORAL JUDGMENT: 1 The appeal is preferred by the original defendants challenging a money decree. The Respondent is the original plaintiff. There is a cross-objection filed by the Respondent. 2 It will be necessary to make a reference to the case made out by the Respondent in the plaint. According to the Respondent, she is a housewife. In August 1996, the Appellant No.2 became aware that 2 FA.132.91 w xobj.6777.91 the Respondent and her husband, who were partners of a factory were intending to sell the said factory. The Appellant No.2 showed willingness to buy the factory. The Appellant No.2 suggested that he was interested in purchasing the factory only if the Appellant No.1 could be one of the purchasers. He represented to the Respondent that the National Saving Certificates held by the Appellants were to mature within a period of nine months and if the same were encashed at premature stage, the Appellants here likely suffer loss of interest. Therefore, a request was made to the Respondent to grant temporary financial accommodation of Rs.2,50,000/- for a period of one year. The Respondent pointed out to the Appellants that she will have to borrow the amount from her bank against her fixed deposit and she will be required to pay interest at the rate of 13% to 14% to the bank. It is alleged that it was agreed that for a period of one year, the Appellants will pay interest at the rate of 20% per annum. It was agreed that the interest payable shall be shown at the rate of 12% per annum and the balance interest i.e. 8% equivalent to Rs.20,000/- shall be paid in 3 FA.132.91 w xobj.6777.91 advance at the time of the Appellant No.1 receiving the loan amount and balance interest at the rate of 12% will be paid at the end of every quarter. According to the Respondent, equitable mortgage of the flat of the Appellant No.1 was made by way of a security for repayment of the loan amount. Reliance has been placed by the Respondent on correspondence made demanding the amount. As the amount was not paid, a suit was filed for recovery of a sum of Rs.2,50,000/- with interest thereon at the rate of 20% per annum from the date of filing of the suit till realization. A prayer was also made for sale of the mortgaged flat. 3 The suit was contested by the Appellants by filing written statement. It was contended that the Respondent was carrying on money lending business without holding a money lending licence and therefore, the suit was not maintainable. It was denied that the Appellant agreed to pay interest at the rate of 20% per annum. The Appellants prayed for dismissal of the suit. 4 FA.132.91 w xobj.6777.91 4 The Respondent examined her husband as a witness. The Appellant No.2 stepped into witness box. The trial Court partly decreed the suit. The operative part of the decree reads thus: “ O R D E R 1. The Plaintiff's suit is hereby decreed. 2. The defendants are jointly and severally order to pay Rs.2,50,000/- along with interest at 12% from 1 st October, 1986. 3. The Plaintiff is directed to adjust the repayment of Rs.45,000/- towards the interest and whatever payment made by the defendant during the pendency of the suit. 4. The defendants are ordered to pay cots of the suit and bear their own.” 5 There is a Cross Objection (stamp) No.6777 of 1991 filed by the Respondent where a prayer is made for grant of interest at the rate of 20% per annum. 6 The learned counsel appearing for the Appellants submitted that even according to the case of the Respondent, a loan was advanced to the Appellant No.1 and not to the Appellant No.2. 5 FA.132.91 w xobj.6777.91 The learned counsel submitted that no decree could have been passed against the Appellant No.2. The learned counsel submitted that as the Respondent was not holding a money lending licence, the suit itself was not maintainable. The learned counsel invited attention of the Court to the averments made in Civil Application No.4486 of 1991, which is the application for leading additional evidence. He submitted that the documents sought to be produced by the said Civil Application include a writing of the Respondent recording that the loan was only in the sum of Rs.1,25,000/-. The learned counsel pointed out that Civil Application No.4485 of 1991 has been filed for grant of permission to amend the written statement for relying upon the said documents. The learned counsel invited the attention of the Court to the affidavit dated 14 th December, 2007 filed by the Appellant No.2 in which it is contended that there was a settlement between the parties and Mr.P.U.Shrinivasan, Advocate handed over all the original documents to the Appellants. 7 The learned counsel appearing for the Respondent 6 FA.132.91 w xobj.6777.91 supported the impugned judgment and decree. She submitted that though the mortgage document may reflect interest at the rate of 12% per annum, if a sum of Rs.20,000/- admittedly paid by the Appellants is taken into consideration, it becomes obvious that it constitutes interest at the rate of 8% per for a period of one year. She pointed out that there is no explanation for payment of Rs.20,000/- by the Appellants. Her submission is that interest deserves to be granted at the rate of 20% per annum. 8 I have carefully considered the submissions. I have perused the record. The Appellant No.2 stepped into witness box. In his evidence, he admitted that about 20 persons had lodged complaints against him alleging commission of an offence punishable under Section 420 of the Indian Penal Code. The execution of equitable mortgage has been admitted. The memorandum of equitable mortgage records that the Respondent has granted a loan of Rs.2,50,000/- to the Appellant No.1 which was to be repaid within a period of one year from 1 st October, 1986 with interest at the rate of 7 FA.132.91 w xobj.6777.91 12% per annum. The original sale agreement in respect of the mortgaged flat and original share certificate held by the Appellant No.1 were admittedly handed over to the Respondent. Thus, memorandum of equitable mortgage proves the fact that the Appellant No.1 had taken a loan of Rs.2,50,000/-, which was repayable within a period of one year from 1 st October, 1986 with interest at the rate of 12% per annum. It must be noted here that in reply dated 31 st August, 1987 sent by the Appellant No.1 to the Advocate for the Respondent, it is admitted that the Appellant No.1 had taken a loan of Rs.2,50,000/- with interest at the rate of 12% per annum from 1 st October, 1986 for a period of one year. However, it was contended that the total sum of Rs.35,000/- has been received by the Respondent towards interest on the loan amount, though the interest payable was only a sum of Rs. 30,000/-. In fact by the said reply, the Appellant No.1 shown willingness to pay the amount. 9 Thus, the fact that the Respondent granted a loan of Rs. 2,50,000/- to the Appellant No.1 has been established. It is also 8 FA.132.91 w xobj.6777.91 established that the loan was to be repaid within a period of one year. The memorandum of equitable mortgage records that interest at the rate of 12% per annum will be payable on the amount of Rs.2,50,000/-. On the face of the said document, the case that there was an oral agreement to pay interest at the rate of 20% per annum cannot be accepted. As far the Civil Applications for amendment of written statement and for permission to lead additional evidence are concerned, by passing separate orders today, the same have been rejected. Hence, the new case sought to be made out for the first time in appeal that the amount re-payable by the Appellant No.1 was only in the sum of Rs.1,25,000/- need not be considered. 10 In the plaint, the Respondent has repeatedly asserted that it is the Appellant No.1, who is the borrower who had availed the loan from the Respondent against the security of equitable mortgage. Letters/notices dated 6 th June, 1987 and 26 th August, 1987 sent by the Advocate for the Respondent have been addressed only to the Appellant No.1 in which it is stated that the Appellant No.1 had taken a 9 FA.132.91 w xobj.6777.91 loan of Rs.2,50,000/-. In fact, Advocate's notice dated 26 th August, 1987 sent by the Respondent to the Appellant No.1 records that it was the Appellant No.1, who had taken a loan. In paragraph No.3 of the deposition, the Respondent has made a reference to correspondence addressed to the Appellant No.1 demanding the outstanding amount. Thus, there is no documentary evidence on record to establish liability of the Appellant No.2. To that extent, the impugned decree will have to be modified. Interest at the rate of 12% per annum will have to be maintained as there is no evidence to show that interest was agreed to be paid to be 20% per annum. 11 The Appellant No.1 has been already granted adjustment of Rs.45,000/- under the impugned decree. 12 There is an affidavit dated 14 th December, 1997 filed by the Appellant No.2 alleging that there was a settlement between the parties during the pendency of the appeal. It was contented that all the original documents have been returned by the Respondent and the 10 FA.132.91 w xobj.6777.91 decree has been satisfied. However, there is no application filed on record either for recording compromise or for marking the decree as satisfied. Hence, the plea based on the affidavit cannot be accepted. Moreover, there is an affidavit filed by the Respondent of one Mr.Ranjit Shrinivasan, Advocate alleging that the documents relied upon in the affidavit of the Appellant No.2 are fabricated. 13 Hence, I pass the following order: i. The appeal is partly allowed and the impugned decree passed against the Appellant No.2 stands set aside and the suit stands dismissed as against the Appellant No.2 (second defendant). However, the decree passed against the Appellant No.1 (first defendant) stands continued ; and ii. Cross Objection (stamp) No.6777 of 1991 is dismissed. There will be no orders as to costs in appeal and cross-objection ; [ A.S.OKA, J ]