IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.M.JOSEPH & THE HONOURABLE MR. JUSTICE M.L.JOSEPH FRANCIS WEDNESDAY, THE 16TH DECEMBER 2009 / 25TH AGRAHAYANA 1931 AS.No. 46 of 1998(E) ------------------- OS.87/1993 of PRL.SUB COURT,KOTTAYAM .................... APPELLANTS: -------------- 1. N. ARAVINDAKSHAN KALPAKA NIVAS, NORTH GATE, VAIKOM. 2. R. CHANDRASENAN PUTHENTHARAYIL VAZHAMANA PO., VAIKOM BY ADV. SRI.V.V.ASOKAN SMT. K. P. RENJINI RESPONDENT: --------------- M/S. OLIMPIC CREDIT CORPORATION IIND FLOOR, CSI SQUARE BUILDING, SASTRI ROAD, KOTTAYAM, REPRESENTED BY MANAGING PARTNER PHILIP JOSE. BY ADV. SRI.S.V.BALAKRISHNA IYER, SENIOR ADVOCATE SRI.P.B.KRISHNAN THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 09/12/2009, THE COURT ON 16/12/2009 DELIVERED THE FOLLOWING: ORDER ON C.M.P. NO. 412 OF 1998 IN A.S. NO. 46 OF 1998 DISMISSED. SD/- K.M. JOSEPH, JUDGE SD/- M.L.JOSEPH FRANCIS, JUDGE 16.12.2009 K. M. JOSEPH & JOSEPH FRANCIS JJ., - - - - - - - - - - - - - - - - - - - - - - - - - - - - A. S. NO: 46 OF 1998 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 16th Day of December, 2009. JUDGMENT Joseph Francis J., This is an appeal filed by the defendants 1 and 2 in O. S. No. 87 of 1993 on the file of Sub Court Kottayam. Respondent herein is the plaintiff in that suit which was filed for recovery of money based on a promissory note. 2. The plaintiff's case in brief is as follows:- On 5.2.90 the defendants borrowed from the plaintiff Rs.1,10,000/- and executed a promissory note undertaking to repay the amount with interest at 18% per annum. On 24.4.90 the defendants made a payment of Rs.6,093/-. The balance amount is due to the plaintiff. The plaintiff sent a lawyer's notice to the defendants demanding the amount. They sent a reply denying their liability. The plaintiff may be allowed to A. S. NO: 46 OF 1998 :2: recover from the defendant Rs.1,63,457/- with interest on Rs.1,10,000/- at 18% per annum from the date of the suit till realisation. 3. In the written statement, the first defendant has raised the following contentions. It is denied that on 5.2.90 the first defendant along with second defendant borrowed Rs.1,10,000/- from the plaintiff and executed a pronote its favour undertaking to repay the amount with interest at 18% per annum. The pronote relied on by the plaintiff is not genuine. One Sukumari Sukumaran was the owner of a bus bearing registration No.KRO 239. The vehicle was in the possession of one E.K. Thankappan. From him the first defendant purchased it, E K Thankappan and one V.G. Gopalakrishnan, an agent of the plaintiff, promised to get 'hire purchase' facility for the bus from the plaintiff. The R.C. book and the letter transferring the ownership of the bus from SukumarI Sukumaran to E . K. Thankappan and from E.K. Thankappan to the first defendant A. S. NO: 46 OF 1998 :3: were handed over to the plaintiff. The sale consideration payable by the first defendant to E. K. Thankappan was Rs.2 lakhs. Out of the first defendant paid Rs.1,00,000/- to E. K. Thankappan. By the 'hire purchase agreement' the plaintiff undertook to pay the balance Rs.1,00,000/- to Thankappan then to effect the transfer of ownership in favour of the first defendant. For that purpose, on 5.2.90, the defendants signed all the documents the plaintiff gave them. But the plaintiff did not take any steps to effect the transfer of ownership in favour of the first defendant. Thankappan, who had already sold the bus to the plaintiff, seized it in the night between 23rd and 24th July 1990. The police have registered a case. In the criminal court the plaintiff helped Thankappan to get the vehicle released to him. The hypothecation agreement and the other documents executed by the defendants cannot be deemed to have come into force. If the plaintiff has made any payment to Thankappan without effecting transfer of ownership in favour A. S. NO: 46 OF 1998 :4: of the first defendant, the defendants are not liable to pay it to the plaintiff. On the basis of the hypothecation agreement executed by the defendants, the R.T.O. had noted the hypothecation “on 18.4.1990 in the name of Thankappan”. At the request of the plaintiff the R.T.O. cancelled it on 1.10.90. If the court finds that the promissory note is one of the documents executed by the defendants in connection with the hire purchase agreement, the debt evidenced by it must be deemed to have been satisfied. The first defendant could operate the bus only for 6 months. He has suffered a loss of Rs.75,000/-. The defendants came to know about the fraud only when they received the notice sent by the plaintiff's counsel on 29.8.1992. The court may be pleased to enter a finding that the plaintiff has not paid any amount to the defendants on the basis of the promissory note in question and the same is not supported by consideration. The suit may be dismissed with compensatory costs. The first defendant may be allowed to recover A. S. NO: 46 OF 1998 :5: Rs.75,000/- from the plaintiff. 4. The second defendant has filed a memo stating that he has no contentions other than the contentions raised in the written statement of the first defendant. 5. In the replication the following contentions have been raised. The promissory note is genuine. The amount mentioned in it was paid to the defendants. Though there were negotiations between the plaintiff and the first defendant for entering into a hire purchase agreement, it was not “duly entered into” as the first defendant failed to get the ownership of the vehicle transferred to his name. The plaintiff is not aware of the seizure of the vehicle by Thankappan. If it was noted in the R. C. book that there was a hire purchase agreement, it was done without the plaintiff's knowledge and consent. The first defendant is not entitled to get any damages from the plaintiff. The counter claim is time barred. It may be dismissed with compensatory costs. A. S. NO: 46 OF 1998 :6: 6. In the Sub court PW1, PW2, DW1 and DW2 were examined and Exbts. A1 to A5, B1 to B12 and X1 were marked. The learned Sub Judge on considering the evidence found that the defendants borrowed Rs.1,10,000/- from the plaintiff on executing Ext.A1 promissory note on 5.2.1990 and the suit was decreed with costs allowing the plaintiff to recover from the defendants Rs.1,62,457/- with interest on Rs.1,10,000/- at 18% per annum from the 20.1.1993 till realisation. The counter claim was dismissed without costs. Against that judgment and decree the defendants 1 and 2 filed this appeal. 7. We heard the learned counsel for the appellants and the learned counsel for the respondent. 8. Learned counsel for the appellants submitted that since the plaintiff failed to prove the execution of the Ext.A1 promissory note, the learned Sub Judge went wrong in decreeing the suit on the basis of original consideration without A. S. NO: 46 OF 1998 :7: any pleading in the plaint. On going through the judgment of the court below, it is seen that the learned Sub Judge has observed that the testimony of PW2 cannot be made the basis to grant the decree in favour of the plaintiff. But the learned Sub Judge on the basis of the admission made by DW1 and DW2 at the time of cross - examination and other documents found that the defendants borrowed Rs.1,10,000/- from the plaintiff on executing Ext.A1 promissory note. Therefore the argument of the learned counsel for the appellants that the learned Sub Judge decreed the suit on the basis of the original consideration alone is not correct. 9. The learned counsel for the appellant relying on the decision of the Apex Court reported in Kaloji Talusappa Ganga Vathi v. Khyanagouda and others (AIR 1970 SC 1420) argued that the he court is bound to dismiss the suit as the plaintiff firm is carrying on the money lending business without license. That argument cannot be accepted at this stage in view A. S. NO: 46 OF 1998 :8: of the fact in the written statement that the appellants/defendants have no case that the plaintiff firm have no license to do the money lending business. 10. PW1 is the officer of the Union Bank of India, Kottayam branch. On summons, PW1 produced Ext.X1 cheque dated 5.2.90 bearing No: 0477449 drawn by the plaintiff firm in the name of the first defendant, Aravindakhan for Rs.1,10,000/- which was encashed on 5.2.90. The account number shown in Ext.X1 is A/C. No : 24012. Ext.A4 is the pass book issued by Union Bank of India, Kottayam branch in the name of plaintiff firm. The account number shown in the pass book is A/C. No: 24012. EXt.A4 pass book shows Ext.X1 cheque for Rs.1,10,000/- in the name of the first defendant Aravindakhan was encashed on 5.2.90. 11. PW2, Sabu was an employee in the Accounts section of plaintiff firm for the period from 1987 to 1994. PW2 deposed that defendants borrowed Rs.1,10,000/- from the A. S. NO: 46 OF 1998 :9: plaintiff firm on executing Ext.A1 promissory note and that he (PW2) signed in the promissory note as an attesting witness. PW2 deposed that he saw the defendants 1 and 2 signing in Ext.A1 promissory note at the office of the plaintiff firm. PW2 deposed that the amount was paid to the defendants by Ext. X1 cheque and that PW2 encashed that cheque and handed over the amount to the defendants. PW2 deposed that he signed on the reverse page of cheque at the time of the encashment. PW2 deposed that towards the first instalment of the loan, the defendants gave a cheque for Rs.6,125/- after two months and after deducting collection charges the plaintiff firm received Rs.6,093/- 12. The first defendant availed loan from the plaintiff firm for purchasing a bus from one E.K. Thankappan. While the first defendant was in possession of the bus, E. K. Thankappan seized that bus. Then the first defendant lodged a complaint before the police. Ext.B12 is the copy of the F.I. A. S. NO: 46 OF 1998 :10: statement given by the first defendant Aravindakhan before the police. In the statement the first defendant has stated that on 5.2.90, he borrowed Rs.1,00,000/- from the plaintiff firm on hypothication arrangement and that he paid Rs.6,093/- on 25.4.90 as first instalment and the payment of instalments from March 90 onwards is defaulted. When the first defendant was asked about Ext.B12 statement while he was examined as DW1, he has nothing to say about that statement. In cross- examination, DW1 deposed that the signature seen in Ext.A1 promissory note is having similarity with his signature. But he does not specifically deny his signature seen in Ext.A1 promissory note at the time of the cross examination. In cross- examination DW1 admits that on 5.2.90, he along with the second defendant came to the office of the plaintiff firm for availing loan for the purchase of a bus. DW1 admits that Ext.A5 is the hire purchase agreement form signed by him and second defendant. Second defendant is examined as DW2. A. S. NO: 46 OF 1998 :11: DW2 deposed that he went along with the first defendant to the office of the plaintiff firm for availing loan for the first defendant by hypothicating a bus. DW2 admits that he signed on stamp affixed blank paper. DW2 does not deny his signature in Ext.A1 promissory note. On appreciating the testimony of PW2 in the light of the admission of DW1 and DW2 and Ext.B12, the learned Sub Judge is perfectly justified in arriving at a conclusion that defendants borrowed Rs.1,10,000/- on 5.2.90 from the plaintiff firm on executing Ext.A1 promissory note. 13. The interest specified in Ext.A1 promissory note is 18% per annum. Under Section 79 of the Negotiable Instruments Act, the plaintiff is entitled to get the interest at that rate. Therefore the learned Sub Judge is justified in decreeing the suit as prayed for. The result is that, this appeal is liable to be dismissed as it is without any merits. Accordingly this appeal is dismissed. The judgment and A. S. NO: 46 OF 1998 :12: decree in O.S. No: 87 of 1993 on the file of Sub Court, Kottayam is confirmed. Parties are directed to suffer their respective costs in this appeal. K. M. JOSEPH, JUDGE M. L. JOSEPH FRANCIS, JUDGE. dl/