IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOMAS P.JOSEPH THURSDAY, THE 17TH SEPTEMBER 2009 / 26TH BHADRA 1931 RSA.NO. 133 OF 2005() ---------------------------------- AS.97/2000 OF PRL.SUB COURT,IRINJALAKUDA OS.209/1998 OF MUNSIFF COURT, KODUNGALLUR .................... APPELLANTS/RESPONDENTS/DEFENDANTS: ------------------------------------------------------ 1. SASI MENON ALIAS M.T.SASIDHARAN, THOTTATH VEETTIL, POOPATHY DESOM, POYYA VILLAGE, KODUNGALLUR TALUK. 2. RADHAMMA, D/O. THOTTATH SASIMENON ALIAS SASIDHARAN POOPATHY DESOM, POYYA VILLAGE, KODUNGALLUR TALUK. BY ADV. SRI.B.RAMACHANDRAN SRI.K.P.SOMASUNDARAN NAIR SRI.SEBASTIAN JOSEPH SMT.JOLIMA GEORGE RESPONDENT(S): APPELLANT/PLAINTIFF: ------------------------------------------------------------- AYYAPPA CHETTIAR, S/O. PUTHEN VELIKKATTIL KUNJAN, POOPATHY DESOM, POYYA VILLAGE, KODUNGALLUR TALUK. ADV. SRI.P.K.IBRAHIM FOR R1 THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 17/09/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: THOMAS P.JOSEPH, J. = = = = = = = = = = = = = = = = = = = = = = = = R.S.A. NO.133 of 2005 = = = = = = = = = = = = = = = = = = = = = = = = = Dated this the 17th day of September, 2009 J U D G M E N T ---------------------- The substantial questions of law framed for a decision in this Second Appeal are: 1. Whether Ext.A1, cheque has any character and feature of a negotiable instrument? 2. Whether any liability can be fastened on appellants based on Ext.A1, cheque? 2. The Second appeal is brought from judgment and decree of learned Principal Sub Judge, Irinjalakuda in A.S. No.97 of 2000 allowing respondent to recover Rs.60,000/- with interest at the rate of 6% per annum from 13.03.1995 till realisation from the appellants in reversal of dismissal of the suit by learned Munsiff, Kodungallur in O.S. No.209 of 1998. Respondent claimed that in connection with marriage of their daughter, appellants borrowed Rs.60,000/- from him on 13.03.1995 undertaking to repay the same within two months R.S.A. No.133 of 2005 -: 2 :- with interest at the rate of 12% per annum and as security, appellant No.1 issued Exhibit A1, cheque dated 13.03.1996 for Rs.60,000/-. Towards additional security, certified copies of title deeds of appellant No.2 (Exhibits A2 & A3) were also given to him. On 01.10.1997 respondent issued Ext.A4, notice to the appellants demanding payment of the amount. Notice was served but there was neither a reply nor payment and hence the suit. Appellants contended that there was neither borrowal nor undertaking to repay the amount with interest. Instead on account of close acquaintance with the appellants, respondent offered to help the appellants for conduct of marriage of their daughter and on 12.09.1995 gave Rs.60,000/- followed by another sum of Rs.5,000/- on 15.09.1995. It is not correct to say that cheque or title deeds were given as security. They claimed that a total sum of Rs.58,500/- was paid to the respondent. Learned munsiff framed issues as to whether respondent is entitled to realise the amount and whether appellant No.2 is a necessary party to the suit. Learned munsiff found that respondent was not able to establish the loan transaction on 13.03.1995 with liability to repay the same with interest at the rate of 12% per annum and non-suited respondent. He carried the matter in appeal. Learned Sub Judge found that claim of respondent is proved and granted decree as first R.S.A. No.133 of 2005 -: 3 :- aforesaid. That judgment and decree are under challenge on the substantial questions of law first above stated. Learned counsel for appellants contended that so far as Ext.A1, cheque dated 13.03.1996 is not presented and got dishonoured it cannot be treated as a negotiable instrument as it has already become stale and no cause of action could flow from it. Further contention is that learned munsiff having found that respondent's claim is not established, first appellate court was not justified in reversing that finding. It is further contended that at any rate first appellate court was not justified in fastening liability on appellant No.2 even after coming to the conclusion that the certified copy the title deeds were not properly given to the respondent to create any security for the amount allegedly borrowed. Learned counsel for the respondent would support the judgment and decree of the first appellate court. 3. So far as the first substantial question of law framed is concerned, it is seen from the plaint that the suit is not based on Ext.A1, cheque. Concededly the cheque was not presented for encashment and hence not dishonoured also. The suit is framed on the original cause of action, i.e. alleged borrowal of Rs.60,000/- on 13.05.1995 and refusal of the appellants to repay the amount on demand and in paragraph 8 of the plaint it is specifically stated that R.S.A. No.133 of 2005 -: 4 :- cause of action for the suit arose on 13.03.1995 when appellants borrowed the amount from respondent. Exhibit A1, cheque has been produced by the respondent as an item of evidence in support of his claim regarding the original transaction. Therefore, Ext.A1 is not presented for encashment or dishonoured or has become stale does not in any way affect the maintainability of the suit or the claim of respondent. The substantial question of law framed as No.1 is answered accordingly. 4. What remained for consideration is whether first appellate court is justified in reversing the finding entered by the trial court. The appeal being continuation of the suit it is well within the power of the first appellate court to appreciate the evidence and come to a proper conclusion though first appellate court has no such power if the trial court has appreciated the evidence in the proper manner and correct perspective and has come to the proper conclusion. Respondent has given evidence as P.W.1 and testified to his case. He asserted that the transaction was on 13.03.1995 on which day, Rs.60,000/- was lent to appellant No.1 and as security Ext.A1, cheque and Exts.A2 and A3, certified copies of title deeds of appellant No.2 were given to him. The understanding was that the property belonging to appellant No.1 could be sold, respondent could R.S.A. No.133 of 2005 -: 5 :- find out a suitable purchaser and on sale of the property, he could appropriate the amount due to him. On the other hand appellant No.1 gave evidence as D.W1. Though originally it was contended by him that payment of amount to him by respondent was voluntary, he also conceded that it was a debt, his claim being that a sum of Rs.58,500/- was repaid to the respondent. Exhibit B1 is the invitation card for the marriage of appellants' daughter and it is not disputed that the marriage was on 16.09.1995. P.W1 admitted that betrothal was about 15 days before that day. Learned munsiff observed that if betrothal was 15 days before 16.09.1995 there was no necessity for the appellants to borrow Rs.60,000/- from respondent in connection with the marriage on 13.03.1995. That was taken as one of the reasons to disbelieve evidence of respondent No.1. Another reasoning of learned munsiff was that if according to respondent the amount was to be repaid within two months with interest at the rate of 12% there was no necessity to give a cheque bearing date 13.03.1996, one year after the transaction on 13.03.1995. Third reason stated by learned munsiff is that the year in Ext.A1 is corrected from 1995 as 1996 though it was done by appellant No.1 with the knowledge of respondent and according to P.W1 that correction was made by appellant No.1 to cheat him. Fourth reason stated by learned munsiff R.S.A. No.133 of 2005 -: 6 :- is that it is admitted by respondent that appellant No.1 is closely acquainted to him and therefore the possibility of respondent helping appellants in connection with the marriage of their daughter cannot be rule out. The 5th reason stated by learned munsiff is that though according to the respondent additional security by way of property of appellant No.2 was given, the documents handed over are not the original of title deeds but certified copies and it is unlikely that with the certified copies appellants wanted to create security in favour of respondent. Yet another reason stated by learned munsiff is that though according to respondent there was a mediation in the presence of D.W3, respondent did not take steps to examine D.W.3 but D.W.3 when examined on the side of appellants stated that he mediated the dispute between appellants and respondent and in the course of mediation appellant No.1 told him that he had paid Rs.58,500/- and a further sum of Rs.5,000/- to respondent and at that time when D.W.3 enquired about that to the respondent the latter had no answer. These circumstances were taken by the learned munsiff to hold that case set up by respondent about the borrowal of Rs.60,000/- on 13.03.1995 cannot be believed. Learned Sub Judge considered these circumstances and found in favour of the respondent. So far as the question whether the transaction was on R.S.A. No.133 of 2005 -: 7 :- 13.03.1995 or as claimed by appellants it was on 12.9.1995 and 15.09.1995 is concerned learned Sub Judge observed from Ext.A1, cheque that the date originally written was 13.03.1995 (date of transaction pleaded by the respondent) and later appellant No.1 with the knowledge of respondent corrected the year as 1996. That obviously indicated that the transaction was on 13.03.1995. Appellants were not able to give any satisfactory explanation for giving the date of Ext.A1 originally as 13.03.1995 and then correcting the year as 1996. 5. So far as the marriage and betrothal of appellants' daughter is concerned it is true that it was on 16.9.1995 and 15 days before that, respectively. But, appellant No.1 when examined as DW1 admitted that even six months prior to that, proposals were coming for his daughter. Learned Sub Judge observed that if that be so it was quite possible that appellants wanted to raise the funds in advance and hence there is nothing illegal in their borrowing Rs.60,000/- on 13.03.1995. The mere fact that the parties were in intimate terms need not necessarily mean that respondent gave the amount voluntarily to the appellants with the intention that it was not required to be returned. If that be so, there was no need or occasion for appellant No.1 to gave the cheque to the respondent. It is on the R.S.A. No.133 of 2005 -: 8 :- above grounds that learned Sub Judge found that the transaction could only on 13.03.1995. I also bear in mind that on the other side there is evidence of DW1 that it was on 12.09.1995 and 15.09.1995. 6. So far as handing over of Exts.A2 and A3, certified copies of title deeds is concerned, it is true that it is not the original title deeds. In fact it is admitted by DW1 (appellant No.1) that the said documents were handed over to respondent. But there is no evidence to show as rightly observed by learned Sub Judge that it was with intention to create security of property belonging to appellant No.2 and, going by the evidence of respondent also it does not appear that intention of appellant No.1 was to create any security of property belonging to appellant No.2. On the other hand it was only to facilitate better negotiation and sale of property and for the respondent to appropriate the amount due to him from the sale proceeds. That cannot be taken as creating security for repayment of the loan. Learned Sub Judge has also observed so though ultimately appellant No.2 also has been held liable to pay the amount which I will refer later. 7. So far as repayment of amount claimed by the appellant No.1 is concerned reliance is placed on his evidence and that of D.W3. So far as D.W.3 is concerned he has only hearsay information R.S.A. No.133 of 2005 -: 9 :- given by appellant No.1 that he has already paid Rs.55,800/- to the respondent. Going by the pleadings of the appellants total amount they paid to respondent is only Rs.58,500/-. But according to D.W.3 appellant No.1 told him that a further sum of Rs.5,000/- was also paid. At any rate evidence of DW3 cannot be made use of since that is only hearsay in nature. So far as appellant No.1 is concerned he is educated and an income tax payee. In such a situation and on the background respondent while borrowing the amount getting cheque it was only probable that appellant No.1 would have obtained some documents for payment of Rs.58,500/-. There is no evidence to show that any amount was repaid to the respondent. A further fact to be noted is that in spite of being served Ext.A4, notice on 01.10.1997 appellants have not replied. 8. Non-examination of D.W3 on the side of respondent was found to be fatal by learned munsiff. But learned munsiff has not referred to the attending circumstances. It is seen from the witness schedule filed on behalf of respondent on 22.12.1999 that DW3 was cited as a witness on his side. Appellants filed their witness schedule on 17.01.2000 citing D.W3 as witness on their side. Respondent was examined on 20.1.2000, i.e, after appellants had filed witness schedule on 17.1.2000 giving copy to counsel for respondent the R.S.A. No.133 of 2005 -: 10 :- same day. Learned counsel for respondent submitted that it was learning that D.W.3 was won over by the appellants that he was not examined on the side of the respondent. Whatever that be it has been brought to the notice of respondent on 17.01.2000 that appellants are proposing to examine D.W.3 as a witness on their side. In such a situation, if respondent did not examine D.W.3 on his side I am unable to find fault with him. Learned munsiff while finding fault with respondent has not considered the relevant circumstances. 9. On going through the judgments of courts below I find that it was not based on proper appreciation of evidence that learned munsiff non-suited respondent while learned Sub Judge considered the relevant aspects, appreciated evidence and found that claim of respondent is proved. 10. However, even after the learned Sub Judge observed that intention of appellant Nos.1 and 2 was not probably to create security for repayment of the loan, appellant No.2 was also made liable to pay the decree amount. While considering that aspect I observed that it does not appear to me that intention of appellant Nos.1 and 2 was to create any security of the property of appellant No.2. Therefore, decree of first appellate court to the extent it concerned appellant No.2 cannot be sustained. Further fact on which R.S.A. No.133 of 2005 -: 11 :- first appellate court went wrong is that the decree made appellant No.1 liable to pay interest at the rate of 6% from 13.03.1995. True, respondent has a case that there was an agreement to pay interest at the rate of 12% per annum. But in that regard what is available is only the version of respondent as P.W.1. Fact that in Exhibit A1, cheque dated 13.03.1996 the amount payable on that date is stated as Rs.60,000/- assumes relevance and importance. If actually there was any agreement to pay interest, necessarily cheque would have been issued for the principal amount and interest payable as on 13.03.1996. That aspect was not taken into account by the learned Sub Judge. Therefore in my view appellant No.1 cannot be saddled with the liability to pay interest on the sum of Rs.60,000/- from 13.03.1995 till the date of suit. To that extent also, decree of first appellate court requires to be modified. The substantial question of law raised as second is answered accordingly. Resultantly, Second Appeal is partly allowed to the following extent: i) Judgment and decree of the first appellate court to the extent it concerned appellant No.2 are set aside and suit will stand dismissed against appellant No.2/defendant No.2. R.S.A. No.133 of 2005 -: 12 :- ii) Judgment and decree of the first appellate court against appellant No.1/defendant No.1 are modified to the extent that respondent is allowed to recover from appellant No.1 and his assets the sum of Rs.60,000/- (Rupees Sixty thousand only) with interest at the rate of 6% from the date of suit till realisation and proportionate costs in the trial court and first appellate court. Iii) Parties shall suffer their respective cost in the Second Appeal. Interlocutory Application No.266 of 2005 shall stand dismissed. THOMAS P.JOSEPH, JUDGE. vsv