IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. Civil Suit No. 37 of 2005. Reserved on: 16.08.2010. Decided on : 28.09.2010. _____________________________________________________ Karam Chand. …Plaintiff. -Versus- Harwinder Singh. …Defendant. Coram: The Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 No. __________________________________________________________ For the plaintiff. : Mr. K. D. Sood, Advocate with Mr. Rajnish K. Lall, Advocate. For the defendant. : Mr. Deepak Kaushal, Advocate. ---------------------------------------------------------------------------------------- Rajiv Sharma, Judge: The plaintiff has pleaded that the defendant is carrying on the business of Real Estate in and around Delhi. On the request of the defendant, the plaintiff advanced a loan of Rs.1.25 crore on 01.11.2003 in the form of Bank Draft bearing No. 363442, dated 01.11.2003 drawn in favour of the defendant on the State Bank of Patiala for Rs.1.25 crore payable at New Delhi. The draft was prepared from the plaintiff’s Saving Bank Account No. 0119005254. The draft was handed over to the defendant by the plaintiff in Chail. The defendant had agreed to pay the amount alongwith interest @ 18% per annum. The defendant was also paid Rs.25.00 lakh in cash in the middle of December, 2003. This amount was withdrawn by the plaintiff from his Saving Bank Account from State Bank of Patiala at Chail. This 1 Whether the reporters of the local papers may be allowed to see the judgment? No. amount was advanced by the plaintiff to the defendant in the presence of Shri Ravi Inder Singh at his residence in Chandigarh. This amount was also payable by the defendant with interest @ 18% per annum. The defendant paid a sum of Rs.20.00 lakh in bits and pieces on different dates to the plaintiff. The defendant, in order to discharge his liability and to pay the loan amount, issued a cheque of Rs.1.00 crore in favour of the plaintiff bearing No. 210797, dated 28.10.2004, drawn on ICIC Bank Ltd., Green Park Branch, H-2 Green Park Extension, New Delhi. The plaintiff sent a cheque for encashment to State Bank of Patiala, Chail Branch on 30.10.2004. However, the same was returned with the endorsement “Unpaid, Insufficient Funds”. The plaintiff had to incur a loss of sum of Rs.19,337/- on account of bouncing of the cheque. The defendant issued another cheque of Rs.50.00 lakh in favour of the plaintiff bearing No. 269643, dated 18.11.2004, drawn on the ICIC Bank Ltd. Green Park Branch, H-2, Green Park Extension, New Delhi. Plaintiff sent the same for encashment through his State Bank of Patiala Branch on 20.11.2004. However, the cheque was dishonoured and returned back with the endorsement “Insufficient Funds”. The plaintiff has to incur a sum of Rs.9,695/- as collection charges on the dishonouring of the cheque. Plaintiff served the defendant with notices dated 02.12.2004 and 29.12.2004, informing him about dishonouring of the cheque and that he had committed offences punishable under Section 138 of the Negotiable Instruments Act. He requested the defendant to re-pay the above money, failing which, criminal proceedings would be initiated against him. As per the averments contained in the plaint, the defendant has only repaid a sum of Rs. 20 lacs and the plaintiff has prayed for a decree of Rs.1,74,42,500/- and future interest @ 18% per annum. 2. The suit has been contested by the defendant by filing the written statement. The defendant has filed the written statement on 28th October, 2005. Thereafter, a C.M.P. under order 6 Rule 17 of the Code of Civil Procedure was preferred. This was allowed by this Court on 05.03.2007 and the amended written statement was permitted to be filed on behalf of the defendant. The defendant has taken the preliminary objection to the effect that this Court has no territorial jurisdiction to adjudicate the suit as the defendant is resident of Delhi and the business of the defendant is also at Delhi; and the partnership between the plaintiff has taken place in Delhi for running the construction of buildings and thereafter sale of flats and land etc.. The defendant has also taken the preliminary objection that the suit is not properly valued for the purpose of Court fee and jurisdiction and, thus, barred under Order 7 Rule 11 of the Code of Civil Procedure. The defendant has also taken the preliminary objection that the plaintiff was not registered under the Himachal Pradesh, Registration of Money Lenders Act, 1976 and Section 3 of the Act specifically barred the suits and applications by money lenders unless money lender is registered and licenced. On merits, it was contended that the defendant was running the business of construction of flats and buildings and also deals in sale/purchase of land and farms and after having purchased the land, the defendant constructs buildings and flats over the same and thereafter sells the same to the customers. The plaintiff approached him in the year, 2003 and desired to join his business as a partner. The defendant accepted the proposal of the plaintiff and as such, the plaintiff and defendant jointly purchased the land in Punjab. However, there was some defect in the title of land as the partition of the owners had not taken place and the money was paid to the owners by the plaintiff and the defendant jointly but lateron, the plaintiff had withdrawn from the deal without any basis. On account of the unwarranted withdrawal of the plaintiff, the defendant suffered huge loss in the deal. It is further averred that the plaintiff after withdrawing from the partnership, the defendant and plaintiff mutually settled the accounts in the presence of witnesses and the cheques issued by the plaintiff in favour of the defendant were destroyed and the cheques given by the defendant to the plaintiff have been agreed to be destroyed by the plaintiff as nothing has remained due. However, the plaintiff did not destroy the cheque and has illegally presented the same in the bank for collection despite the knowledge that nothing was due against the defendant. 3. The plaintiff filed replication. In the replication, the plaintiff has reiterated the facts, as stated in the plaint and prayed to decree the suit. 4. On the pleadings of the parties, the following issues were framed on 20.07.2007: 1. Whether the defendant took a loan of Rs.1.25 crores from the plaintiff? OPP 2. Whether another sum of Rs.25.00 lacs in cash was paid to the defendant? OPP 3. If issues No. 1 and 2 are proved in the affirmation, how much amount of loan is payable by the defendant to the plaintiff? OPP 4. Whether the defendant to discharge his liability of the loan amount issued a cheque of Rs.1.00 crore to the plaintiff and the same was returned as unpaid, if so, its effect? OPP 5. Whether another cheque of Rs.50.00 lacs was issued and the same also bounced, if so, its effect? OPP 6. Whether the plaintiff is entitled to recover a sum of Rs.19,337/- and Rs.9,695/- on account of expenses incurred due to bouncing of the cheques? OPP 7. To what rate of interest the plaintiff is entitled to recover from the defendant and since when? OPP 8. Whether the plaintiff has no cause of action to file the suit? OPD 9. Whether this court has the jurisdiction to try the suit? OPD 10. Whether the suit is properly valued for the purpose of court fees and jurisdiction? OPD 11. Whether the defendant has paid a sum of Rs.75.00 lacs after filing of the suit towards the said amount? OPD 12. Whether the defendant has paid the entire amount payable to the plaintiff, as alleged? OPD 13. Whether the plaintiff and defendant entered into a partnership and jointly purchased the land in Punjab, in which partnership the parties suffered losses and plaintiff withdrew therefrom and the defendant settled the account as alleged? OPD 14. Whether the plaintiff is a money lender and suit is not maintainable? OPD 15. Relief. 5. The plaintiff alone has led evidence. The defendant has been granted several opportunities to lead his evidence. The O.M.P. No. 17 of 2010, preferred by the defendant for preponment of the case was dismissed by this Court on 16.03.2010. Thereafter, the defendant was permitted to lead his evidence on 04.05.2010 and 03.06.2010, however, he did not lead any evidence and the evidence of the defendant was closed on 26.07.2010. 6. I have head the learned counsel for both the parties and gone through the records carefully. 7. For the reasons to be recorded hereinafter while discussing the issues, my findings to the issues are as under: Issues No. 1 to 7 : Yes. Issue No. 8 : No. Issue No. 9 : Yes. Issue No. 10 : Yes. Issue No. 11 : The defendant has only paid a sum of Rs.25 lacs after the filing of the suit. Issue No. 12 : No. Issue No. 13 : No. Issue No. 14 : No. Relief : The suit of the plaintiff is decreed as per operative portion of the judgment. REASONS FOR FINDINGS ISSUES NO. 1 TO 7. 8. These issues have been taken up together as similar evidence and law is required to be discussed in order to prove these issues. In order to prove the above issues, the plaintiff has examined three witnesses. PW-1 is Shri Ashwani Kumar. He has produced the summoned record. He was working as Single Widow Clerk in State Bank of Patiala, Chail, since 2006. According to him, cheque No. 269643, dated 18th November, 2004, issued by defendant in the name of the plaintiff payable on the ICICI Bank Branch Green Park Extension, New Delhi, was presented by the plaintiff. The cheque was dishonoured by the bank. Ex.PW-1/A is a photocopy of the cheque, which was presented. The returning memo of the bank received is Ex.-PW1/B. This cheque was for a sum of Rs.50 lacs. The bank debited a sum of Rs.9,655/- as charges for bouncing etc. to the plaintiff in his account. The computerized copy of the accounts statement of the plaintiff is Ex.-PW1/C. The account was duly certified by the Manager of the Bank. A bank draft in a sum of Rs.1.25 crore (Rs.1,25,000,00/-) was prepared on 01.11.2003. This was reflected in the account Ex.-PW1/C. This bank draft/bankers cheque was encashed on that very day as recorded in Ex.PW-1/C, which is of account No. 01190005254 in the name of Karam Chand and Inderjit. A sum of Rs.19,337/- has been debited to the account of the plaintiff on 27.11.2004, as recorded in Ex.-PW1/C. This amount was charged for services, commission and postal charges. On 24th December, 2004, another sum of Rs.9,695/- has been debited to the account of the plaintiff. These charges relate to “cheque bounced and postal charges”. Ex.-PW1/D is a certificate issued by the bank. In his cross-examination, he deposed that he cannot say from the statement Ex.-PW1/C in whose name the draft of Rs. 1crore 25 lacs (Rs.1,25,000,00)/- was prepared. He has admitted that in the statement Ex.-PW1/C, cheque with respect to which “postal charges and bounced charges” have debited, has not been shown. He could not disclose in whose name, the cheque for Rs.30 lacs was issued on 22nd September, 2003, which was reflected in Ex.- PW1/C, shown and encircled in red in Ex.-PW1/C. 9. PW-2, Shri Vijay Negi, was working as Ahalmad in the Court of Judicial Magistrate Ist Class at Kandaghat. He has brought the summoned record in case No. 51/3, titled Karam Chand Versus Harwinder Singh. Ex.PW-2/A is a copy of the complaint which was filed under Section 138 of the Negotiable Instrument Act against the defendant. Ex.PW-1/B is a copy of the orders passed by the Courts from time to time. Ex.PW-2/C is the copy of the memorandum dated 02.10.2004 returning the cheque of Rs. One crore on which charges of Rs.19,337/- have been debited by the bank. Ex.PW-2/D is the copy of the notice under Section 138 of the Negotiable Instrument Act alongwith receipt which was issued to the defendant. Ex. PW-2/E is the copy of an application moved on behalf of the defendant on 04.04.2008. Ex.PW-2/F is the copy of the reply filed by the plaintiff to this application. Ex.PW-2/G is the copy of the cheque of Rs.One crore, original of which has been filed in criminal proceedings under Section 138 of the Negotiable Instrument Act and Ex.PW-2/J is the certificate relating to the cheque which has been filed on the record of the criminal proceedings by him. 10. PW-3 is the plaintiff. He has deposed that he was introduced to the defendant by a common friend Shri Ravi Inder Singh. The defendant approached him and requested him that he required Rs.1.50 crores. The plaintiff paid him a sum of Rs.1.25 crores by bank draft on 1st November, 2003. This bank draft was prepared in the name of defendant. This draft was prepared from his bank account with the State Bank of Patiala at Chail. The bank draft was issued from his account. Ex.PW-1/C is the copy of account which was joint with his wife. He paid this amount to the defendant in the bank premises itself. This bank draft/bankers cheque was prepared from the joint account of his and his wife was duly reflected in Ex.PW-1/C. The bank draft was payable at Chail. The defendant has assured him that he would pay him interest @18% per annum. This loan amount was to be utilized by him for his business purposes etc.. In addition to this amount, he paid him a sum of Rs. 25 lacs in December, 2003 by a bank draft. This amount was paid in the presence of Shri Ravi Inder Singh at Chandigarh. It was paid on the same terms and conditions, on which he had paid the previous loan amount by a bank draft. The defendant paid a sum of Rs.20 lacs to him in installments. A cheque in the sum of Rs.One crore payable on ICICI Bank Limited, Green Park Extension Branch, New Delhi, dated 28.10.2004, Ex.PW-3/A was given to him by the defendant. He retained the original cheque as the original was required to be filed in proceedings under Section 138 of the Negotiable Instruments Act. This cheque was signed by the defendant and he identified his signatures as he has seen him writing. His signatures are encircled red in point ‘A’ on Ex. PW-3/A. He deposited this cheque in the joint bank account. This cheque was dishonoured and returned to him. Ex.PW-2/G is the intimation sent to him by the bank, stating that the cheque had been dishonoured because of insufficiency of funds. Ex. PW-2/G is the memo which was sent to him by the bank intimating him this fact. His bankers charged Rs.19,337/- as charges for returning the cheque of Rs.One crore. These charges were reflected in Ex.PW-1/C. A second cheque dated 18.11.2004 in the sum of Rs.50 lacs was handed over to him by the defendant. This cheque was also payable at ICICI Bank Limited, Green Park Extension Branch, New Delhi. Ex.PW-1/A is the copy of this cheque. The original cheque has been retained by him as it was required to be produced in proceedings under Section 138 of the Negotiable Instrument Act. This cheque was also signed by the defendant. He identified his signatures, which are encircled at point ‘B’ on Ex.PW-1/A as he has seen him writing and signing. His bankers charged a sum of Rs.9,695/- for processing this cheque. The memo returning the cheque to him is Ex. PW-2/B. This cheque was deposited by him for collection in his account at Chail. After the cheques bounced, he requested the defendant to pay him the amount which he had borrowed from him. He refused to pay either the principal or interest accrued on this amount. Ex.PW-2/D is the notice which was issued to the defendant through his Advocate. According to him, he is entitled to a sum of Rs.1,74,42,500/- alongwith costs and interest @ 18% per annum from the date as on 2nd July, 2005 on the date he filed the suit. He further deposed that he filed the proceedings under Section 138 of the Negotiable Instrument Act in the Court of Judicial Magistrate 1st Class, Kandaghat. In proceedings under Section 138 of the Negotiable Instrument Act pending at Kandaghat, the defendant paid him Rs.25 lacs in two installments, namely, Rs.15 lacs on 24th September, 2005 and Rs.10 lacs on 18th November, 2005. These payments were made towards the amount of the cheques issued by the defendant which have been dishonoured. He further deposed that he did not enter into any partnership with the defendant, but he advanced the suit amount to him as a loan to help out the defendant as a friend since he was in need of money. He is not a money lender, but for the fact that the defendant was known to him, he had given to him the same. He was cross-examined by the defendant. He admitted that his income from agricultural operations was about Rs.25 lacs per year. The bank draft of Rs.1.25 crores, which was paid to the defendant was prepared from the joint bank account of his and his wife with the State Bank of Patiala at Chail. Ex.PW-1/C is the statement of account of that bank account. The draft/banker cheque was enchashed by the defendant on that very day from the bank. He admitted that villagers sometimes come and take some money from him, which was duly returned by them. He never charged any interest from any one of them. According to him, he had only helped 2/3 people at Ambala and about 2/3 people at Hoshiarpur. The defendant never executed any written agreement with him. He did not enter into any partnership with the defendant. He has denied the suggestion that he had ever offered a cheque of Rs.1.25 crores to the defendant for the purpose of running the purported/alleged business. There was no settlement between him and the defendant that the cheques, which are the subject matter of proceedings under Section 138 of the Negotiable Instruments Act, will not be presented by him to his bankers for encashment. He further deposed that he did not enter into any agreement with the defendant that both of them would construct flats/houses in partnership or joint venture. He also deposed that he is not a tax assessee since his income is from the agriculture only. He denied the suggestion that he was a money lender engaged in this business. This is the oral as well as documentary evidence led by the plaintiff. 11. The defendant, despite opportunities, as noticed above, has not led any evidence. 12. It has come in the statement of PW-3 that he has paid a sum of Rs.1.25 crores to defendant on 1st November, 2003 by way of bank draft, which was prepared in the name of defendant. This draft was prepared from his bank account with the State Bank of Patiala at Chail. Ex.PW-1/C is the copy of that account which was joint with his wife. The bank draft was payable at Chail. He had also paid a sum of Rs.25 lacs to the defendant in December, 2003. It was paid at Chandigarh. The defendant has only repaid a sum of Rs.20 lacs before the filing of the suit and another sum of Rs.25 lacs after filing of the suit. 13. PW-1, Shri Ashwani Kumar was working as Single Widow Clerk in State Bank of Patiala, Chail. According to him, a bank draft in a sum of Rs.1.25 crore (Rs.1,25,000,00/-) was prepared on 01.11.2003. This entry was reflected in the account Ex.PW-1/C. This bank draft/bankers cheque was encashed on that very day, as recorded in Ex.PW-1/C. 14. Mr. Deepak Kaushal, learned counsel for the defendant has strenuously argued that since the plaintiff was not registered under the Himachal Pradesh, Registration of Money Lenders Act, 1976, he could not advance the money. The plaintiff has categorically denied that he was engaged in the business of money lenders. It has come in his statement that he is an agriculturist by profession and on few occasions, he had advanced the loans to the farmers without any interest. The plaintiff has reiterated in his replication that it was a friendly loan to help a friend, who has approached him seeking help. Accordingly, the plaintiff has proved by leading cogent and convincing evidence on record that he has advanced a sum of Rs.1.50 crores to the defendant. A sum of Rs.20 lacs was repaid by the defendant before filing of the suit and another sum of Rs.25 lacs was paid by the defendant to the plaintiff in two installments, namely, Rs.15 lacs on 24th September, 2005 and Rs.10 lacs on 18th November, 2005. A cheque in the sum of Rs.One crore was issued by the defendant to the plaintiff payable at ICICI Bank Limited, Green Park Extension Branch, New Delhi, dated 28.10.2004 Ex.PW-3/A. The plaintiff retained the original of the cheque since the same was required to be filed in proceedings under Section 138 of the Negotiable Instruments Act. This cheque was signed by the defendant. The plaintiff identified his signatures as he had seen him writings. His signatures are encircled red in point ‘A’ on Ex.PW-3/A. This cheque was deposited by the defendant in the joint bank account of the plaintiff and his wife (Ex. PW-1/C) at Chail. This cheque was dishonoured and returned to the plaintiff. Ex.PW-2/G is the intimation sent to him by the bank, stating that the cheque had been dishonoured because of insufficiency of funds. The plaintiff’s bankers charged a sum of Rs.19,337/-, as charges for returning the cheque of Rs. One crore. These charges were also reflected in Ex.PW-1/C. The second cheque in the sum of Rs.50 lacs, dated 18.11.2004, was handed over to him by the defendant. This cheque was also payable at ICICI Bank Limited, Green Park Extension Branch, New Delhi. Ex.PW-1/A is the copy of the cheque. The original cheque was retained by the plaintiff. This cheque was also signed by the defendant. Plaintiff identified his signatures. His bankers charged a sum of Rs.9,695/- for processing this cheque. The memo of returning the cheque to him is Ex.PW-2/B. This cheque was deposited by him for collection in his account at Chail. PW-1, Shri Ashwani Kumar has proved Ex.PW-1/A, the copy of the cheque which was presented. 15. PW-2, Shri Vijay Negi has poroved Ex.PW-2/A, which is the copy of the complaint filed under Section138 of the Negotiable Instrument Act against the defendant. Ex.PW-2/C is the copy of the memorandum, dated 02.10.2004 returning the cheque for Rs. One crore, on which charges of Rs.19,337/- has been debited by the bank. Ex.PW-2/D is the copy of notice issued under Section 138 of the Negotiable Instrument Act alongwith receipt which was issued to the defendant. Ex.PW-2/J is the certificate relating to the cheque which has been filed on the record of the criminal proceedings by him. It is duly proved on record on the basis of the documents and oral statements by PWs. No. 1, 2 and 3 that a cheque of Rs.1 crore 50 lacs had bounced due to insufficiency of funds and a sum of Rs. 19,337/- and 9,695/- was debited in the account of the plaintiff. Accordingly, the defendant is held liable to pay a sum of Rs.1,5,00000/ to the plaintiff. Plaintiff has not entered into any agreement with the defendant as far as the rate of interest is concerned. The Court is of the opinion that the plaintiff is only entitled to the interest prevailing at bank rates on the principle amount, i.e., 9%. ISSUES NO. 8 & 9. 16. The defendant has not led any evidence in support of these issues. Consequently, it is held that the cause of action has accrued to the plaintiff to file the present suit and this Court has the jurisdiction to try the suit since the cause of action has arisen within the State. ISSUE NO. 10. 17. The defendant has not led any evidence in order to prove this issue. The suit is properly