IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE P.BHAVADASAN THURSDAY, THE 28TH OCTOBER 2010 / 6TH KARTHIKA 1932 AS.No. 746 of 1996() ------------------------- OS.24/1985 of SUB COURT, KASARAGOD .................... APPELLANT(S)/1ST DEFENDANT ------------------------------------- M/S. NAVADURGA CLARY AND MINERALS, REPRESENTED BY PROPRIETOR PARAMESHWARA HOLLA, KAJEKODI HOUSE, KADAMBAR VILLAGE, KASARAGOD TALUK, P.O. KADAMBAR, (VIA) MANJESHWAR. BY ADVS. SRI.K.SHRI HARI RAO, SRI.K.R.RAGHUNATH RESPONDENT(S)/PLAINTIFFS/DEFENDANTS 2 TO 11. --------------------------------------------------------------- 1. SYNDICATE BANK, REPRESENTED BY ITS MANAGER, VORKADY BRANCH, KASARAGOD TALUK, KASARAGOD DISTRICT,. 2. DR. GANAPATHY BHAT, MEDICAL PRACTITIONER,HASBETTU VILLAGE, KASARAGOD TALUK, POST MANJESHWAR, KASARAGOD DISTRICT. 3. K. NARAYANA HOLLA (DEAD) 4. LESSLI R. ARON, EX-PROPRIETOR OF M/S. MANJESHWAR CHINA CLAY MINES, AT PRESENT RESIDING AT NO.5 STATE BANK, COLONY, PATTAVARAM MADRAS - 600 043. .......2/-... ...2... 5. BEEPATHUMMA, W/O. MOHAMMED ISAMAL C/O. DR.AHMMED MOGRAL, RESIDING AT MOGRAL IN MOGRAL VILLAGE, KASARAGOD TALUK, P.O. MOGRAL,KASARAGOD DISTRICT. 6. AYSHA, W/O. DR.AHMMED MOGRAL RESIDING AT MOGRAL, MOGRAL VILLAGE, KASARAGOD TALUK, P.O. MOGRAL,KASARAGOD DISTRICT. 7. LALITHA, W/O. K. NARAYANA HOLLA, RESIDING AT KAJEKODE HOUSE, KADAMBAR VILLAGE, KASARAGOD TALUK, P.O.KADAMBAR. 8. NARASIMHA MOORTHI, S/O. LATE K.NARAYANA HOLLA , -DO- 9. SREEKANTHA HOLLA, S/O. LATE K.NARAYANA HOLLA, -DO - 10. VIJAYA S. HEBBAR. D/O.LATE K. NARAYANA HOLLA, -DO- 11. JAYANTHI R. KANNAPPADY, D/O.K. LATE NARAYANA HOLLA, -DO- R1 BY ADV. SRI.S.V.BALAKRISHNA IYER THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 28/10/2010, ALONG WITH AS NO.83 OF 1996 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: svs/ THOTTATHIL B.RADHAKRISHNAN & P. BHAVADASAN, JJ. ------------------------------------------- A.S.Nos.746 OF 1996 & 83 OF 1997 ------------------------------------------- Dated this the 28th day of October, 2010 JUDGMENT Thottathil B.Radhakrishnan, J. 1.These appeals arise from a suit for recovery of money. AS.83/97 is by the plaintiff bank and AS.746/96 is by the first defendant. We will hereafter refer the parties in terms of their status in the suit. 2.The 4th defendant Lesli Aron had a proprietary establishment. Going by the materials on record, he entrusted that establishment to the first defendant K.Parameswara Holla. At that time, certain outstandings were due from the 4th defendant to the plaintiff bank in OSL.22/76, OD.2/77 and SOD.1/77. The first defendant applied and obtained OSL.48/79 and SOD.1/79 for Rs.75,000/- and Rs.30,000/- respectively from the plaintiff. The amount of Rs.75,000/- covered by OSL.48/79, under proper authorization, was AS.746/96 & 83/97 2 credited against the outstandings due to the plaintiff from the 4th defendant. Thereafter, in 1981, the credit limit of SOD.1/79 was enhanced to Rs.45,000/- and the said account was renewed as SOD.2/81. These materials show that from 1979 and 1981, the transactions were in terms of what is stated above. The borrowal made by the first defendant was supported by collateral security offered by defendants 2 and 3. They had also executed Demand Promissory Note in favour of the plaintiff. With the passage of time, amounts accrue to be outstanding. This led to a suit notice in 1984 and the institution of the suit, from which these appeals arose, in 1985. 3.The suit was initially laid against defendants 1 to 3, i.e., the principal debtor Parameswara Holla and those who stood as sureties or had offered collateral securities. On the basis of their pleadings, Lesli Aron was brought in as the 4th defendant. Defendants 5 and 6 were also brought in since they were attaching creditors against the first defendant and the property involved in the suit. Pending the suit, the third AS.746/96 & 83/97 3 defendant K.Narayana Holla died. His legal representatives were brought on record as supplemental defendants 7 to 11. 4.Before us, we have the plaintiff and the first defendant. The plea of the first defendant, who had filed a joint written statement along with the 3rd defendant, was that they did not approach the plaintiff for financial assistance; defendants 1 and 3 are not aware of the loans borrowed by the 4th defendant; plaintiff took signatures of the first defendant on various blank papers and documents were concocted and produced along with the plaint and that defendants 1 and 3 are not liable. They also pleaded that the acknowledgments of debt produced are not true and genuine and that the pronotes produced are not supported by consideration. The first defendant filed an additional written statement contending that he did not agree for the adjustment of Rs.75,000/- against the loan amount of the 4th defendant. He further stated that though he had purchased the proprietary unit from the 4th defendant Lesli Aron, that purchase was set aside by a civil AS.746/96 & 83/97 4 court in an execution proceedings and since that sale in his favour had become invalid, he was not liable to pay any debt referable to the 4th defendant. 5.The second defendant filed a separate written statement contending that defendants 2 and 3 were asked to sign documents by the the first defendant and the then Manager of the plaintiff. The Manager of the bank is accused of having taking signatures of defendants 2 and 3 in blank papers and printed forms. The second defendant states that the plaintiff bank and the first defendant played a fraud on defendants 2 and 3 who, according to him, are entitled to be discharged of all liabilities. 6.With the aforesaid, the burden of proof lies on the plaintiff to prima facie prove the transaction and the burden would then shift to the defendants, having regard to the plea they have against the transaction and the documents. AS.746/96 & 83/97 5 7. We find that PWs.1 to 3 were examined on behalf of the bank and the first defendant alone tendered oral evidence as DW1. 8.The court below did not find any material to disbelieve the documentary evidence on record. Those materials proved the transaction of lending by the bank to the first defendant, supported by the suretiship offered by defendants 2 and 3. With this material, in our view, unfortunately, the court below was persuaded to go into the transaction between defendants 1 and 4 and also as to whether there was any novation of contract between the plaintiff and the 4th defendant. In our view, the question of novation between the plaintiff and the 4th defendant were totally alien to the defence set up by defendants 1 and 3 in their joint written statement as against the plaint claim. 9.In view of the fact that documentary evidence proved the lending made by the plaintiff to the first defendant as OSL.48/79 and SOD.1/79, renewed as SOD.2/81, and with the AS.746/96 & 83/97 6 supporting materials, the plaintiff was entitled to a decree as sought for. The appeal of the plaintiff, AS.No.83/97, is therefore, entitled to succeed while the appeal of the first defendant, AS.746/06, is liable to be dismissed. 10.As regards the question of future interest, we notice that the transaction is a commercial one in terms of explanation II to Section 34(1) CPC and the proviso to that sub section. Taking into consideration the totality of the facts and circumstances, we order that the eligible rate of interest chargeable from the date of suit till the date of realization on the principal amount would be 12%. 11.In the result, (i)AS.746/96 is dismissed. (ii)AS.83/07 is allowed, setting aside the impugned decree to the extent it is against the plaintiff and the plaintiff is AS.746/96 & 83/97 7 granted a decree against defendants 1, 2 and against the estate of the third defendant for a sum of Rs.87,191/21 with future interest at 12% per annum from the date of suit, with proportionate costs. (iii)Defendants 7 to 11 are not personally liable but are liable only to the extent of any property they would inherit from the third respondent. (iv)The suit is decreed with costs throughout, recoverable from defendants 1 to 3. Sd/- THOTTATHIL B.RADHAKRISHNAN, Judge. Sd/- P.BHAVADASAN, Judge. kkb.30/10.