1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY O. O. C. J. Summons for Judgment No.162 of 2008 IN Summary Suit No.545 of 2008 Jayashree Jayprakash Shah .. .. Plaintiff v/s. Ganesh Sadashiv Kale & ors. .. .. Defendants Mr.Jayant Gaikwad for Plff. Mr.Y.R. Dube for Defts. ----- CORAM : SMT.ROSHAN DALVI, J. Dated : 6 th April 2009 P.C. : 1. This Suit is filed essentially upon the 4 Promissory Notes dated 15.9.2004, 1.11.2004, 1.1.2005 and 4.3.2005 for Rs.3,00,000 /- , Rs.2,00,000/- , Rs.2,00,000 /- and Rs.1,00,000 /- , respectively. The principal amount was required to be repaid with interest at the rate of 3% per annum as mentioned in the Promissory Note itself. It is the Plaintiff's case that the interest until January 2006 was paid. It is also the Plaintiff's case that part amount of the principal to the extent of Rs.1.25 Lakhs was paid. The balance remained unpaid. Hence the Plaintiff issued a notice of demand on 9.3.2006. 2. It is the Plaintiff's case that Defendant No.1 replied to the 2 notice on 10.3.2006. Defendant No.1 did not deny the execution of the Promissory Notes or the amount payable upon any of those Promissory Notes. He requested “further loan amount of Rs.2 Lakhs”. He offered to execute the Deed of Mortgage, Power of Attorney and a declaration in respect of his shop as well as residential premises. He empowered the Plaintiff to deduct expenses for stamp duty, registration fee and other charges. 3. This reply shows the initial loan granted and the balance unpaid. Only then could Defendant No.1 request the Plaintiff to grant “further” loan of Rs.2 Lakhs. This, therefore, is an admission of the liability towards the initial loan granted to the Defendants. 4. Under that letter, Defendant No.1 requested the Plaintiff not to take the legal proceedings but to use his immovable property being the shop and residential premises. 5. Defendant No.1 wrote another letter dated 20.3.2006. He offered another Promissory Note to be executed by his nephew and his brother in “continuation of my debts and liabilities”. This letter also shows the initial liability and the admission of it having remained undischarged. 3 6. Defendant Nos.1 and 3 executed a Guarantee- cum- indemnity on 20.5.2006. The Deed of Guarantee- cum- indemnity shows agreement to make payment of loan of Rs.7,64,830 /- at the same rate of interest “merging in debts and liabilities of the principal debtor/borrower” to be paid on demand on or before 5.6.2006. This is the further written agreement between the parties for payment of a liquidated amount. The amount mentioned in the guarantee is the net amount payable as on that date after giving credit for Rs.1.25 Lakhs of the principal amount already paid and the earlier interest paid. 7. The guarantee shows the merging of the debts and the requirement of repayment by 5.6.2006. Another Promissory Note is executed by Defendant Nos.1, 2 and 3 on 20.3.2006. That Promissory Note requires payment to be made on demand on or before 5.6.2006. It is also for Rs.7,64,830 /- at the same rate of interest of 3% per annum. This Promissory Note shows “outstanding/unpaid arrears of debts and liabilities”. 8. This Promissory Note further shows that there were the outstanding amounts payable as of today which were once again unconditionally promised to be repaid with the same rate of interest. Incidentally, it is the same amount 4 mentioned in the Deed of Guarantee and is payable on the same date mentioned in the Deed of Guarantee. 9. The execution of this Promissory Note is the written acknowledgment of liability extending the period of limitation upon the initial Promissory Notes. 10. On 25 th April 2006, the Plaintiff issued a notice of demand. 11. On 20.7.2006, Defendant No.1 again issued a cheque for Rs.8.25 Lakhs in favour of the Plaintiff. Thereafter on 4.8.2006 the Defendants issued a further cheque for Rs.8,28,294 /- in favour of the Plaintiff. This would represent further interest on the amount mentioned in the earlier cheque. The cheque has been dishonoured. The legal notice has not been replied. The Plaintiff has claimed amount under the last cheque issued on 4.8.2006 for Rs.8,28,294 /- with the same rate of interest. 12. It is seen that several loans have been taken from time to time. For the loan several Promissory Notes have been issued from time to time. Considerations mentioned in the Promissory Notes are presumed. The amount under the Promissory Notes was not repaid except for the part payment of the principal amount and the part payment of interest. 5 The Plaintiff's initial letter has resulted in two letters of the Defendants. Under both these letters there is an implied admission on liability, a request for further loan, the offer of charging the immovable property of Defendant No.1, continuation of debts and liabilities followed by the execution of the guarantee deeds and agreement between the parties. That document relied upon the amount payable with interest as on that date. That is further followed by another Promissory Note of the same amount. That amount not having been repaid, a larger amount represents the total liability on the principal amount and the additional interest at the agreed rate. The last of the cheques shows such liquidated amount as would be payable on the date of execution of the cheque. That includes the same rate of interest for the amount unpaid until then. The written acknowledgment of liabilities made from time to time shows the amount which remained payable as having been aggregated from time to time. Of course, interest on the last cheque amount also at the rate of 3% per annum is claimed. To that extent, there is no written agreement. The Suit is filed upon the liquidated amount under the last cheque. Interest is claimed at the agreed rate of interest under the initial Promissory Note and the Deed of Guarantee. 13. It is clear that some amount of loan was taken by the 6 Defendants from the Plaintiff. That loan amount has been admitted. However, interest on that loan amount has been computed such that it would be compounded on the balance amount payable. Hence the amount shown in the last cheque including the interest appears to be inflated to the extent of the interest which is included in the amount. The initial loan is for a total amount of Rs.8 Lakhs represented by 4 Promissory Notes dated 15.9.2004, 1.11.2004, 1.11.2004 and 4.3.2005. Interest would certainly be payable but at the simple interest rate on these amounts until payment is made upon acknowledgment of liability. 14. The execution of the letters, deed of guarantee as well as further Promissory Note show that there is no substantial defence to the principal amount which has to be recovered by the Plaintiff. 15. Upon the Defendants depositing in Court Rs.6,75,000 /- within 8 weeks, the Defendants shall have leave to defend the Suit. If the amount is deposited, the Defendants shall file their Written Statement within 30 days. (SMT.ROSHAN DALVI, J.)