IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN THURSDAY, THE 11TH JUNE 2009 / 21ST JYAISHTA 1931 AS.No. 892 of 1997() -------------------- OS.165/1995 of SUB COURT, QUILANDY .................... APPELLANT(S): PLAINTIFF: ----------------------------------------- M.AMMED HAJI, S/O. MOIDEEN HAJI, AGED 46 YEARS, AGRICULTURIST, MAVILAD VEEDU, P.O. PALERI, (VIA), KUTTIADY, KOYILANDY TALUK, KOZHIKODE DISTRICT. BY ADVS. MR.P.K.SURESH KUMAR, SMT.M.R.SREELATHA. RESPONDENT(S): DEFENDANT: ------------------------------------------------ SRI.K.P.GANGADHARAN NAMBIAR, S/O.KUNHIRAMAN NAIR, AGED 57 YEARS, RETD. TEACHER, CHAMAKUNNUMMAL VEEDU, P.O.PERAMBRA – 673 525, KOYILANDY TALUK, KOZHIKODE DISTRICT. BY ADV. SRI.P.C.SASIDHARAN THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 11/06/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: Kss K. SURENDRA MOHAN, J ------------------------------------------------------------ A.S. NO: 892 OF 1997 ----------------------------------------------------------- Dated this the 11th June, 2009. JUDGMENT This is an appeal against the judgment and decree of the Subordinate Judge, Quilandy in O.S.165/1995. The suit was filed by the appellant for the realisation of an amount of Rs.40,000/- from the respondent/defendant. The court below has decreed the suit in part finding that the appellant is entitled to recover only an amount of Rs.40,000/- from the respondent/defendant. The Court below has decreed the suit in part finding that the appellant is entitled to recover only an amount of Rs.11,600/- with interest thereon at the rate of 18% per annum. According to the appellant the Trial Court seriously went wrong in rejecting the claim of the appellant in part. 2. According to the appellant/plaintiff, the respondent/defendant had borrowed an amount of Rs.40,000/- from him in connection with the marriage of his daughter. He had also handed over a cheque for the said amount drawn on the State Bank of India, Perambra dated 30.4.1993, bearing No: 046017. The defendant had promised to pay the interest separately and it was therefore that the cheque was issued for the principal sum alone. A.S.892/1997 2 Though the cheque was presented for encashment, the same was dishonoured as per memo dated 28.5.1993 for the reason that the account was closed. Though a notice was issued from the appellants lawyer demanding payment of the cheque amount, the amount was not paid. The appellant initiated prosecution proceedings against the respondent under the Negotiable Instruments Act. However, the Criminal Court acquitted the respondent holding that an offence under Section 138 of the Negotiable Instruments Act is not made out when a cheque is dishonoured for the reason that the account is closed. The defendant then filed the present suit for recovery of an amount of Rs.57,733/- being the borrowed amount of Rs.40,000/- with interest thereon at the rate of 18% per annum and costs. 3. The suit was contested by the defendant by filing a written statement. According to him he had not availed a loan of Rs.40,000/- from the appellant on the occasion of the marriage of his daughter. He alleged that he had approached the appellant along with one Kunjikannan and Gopalan Nair with a request for advancing an amount of Rs.36,000/- in advance, as value of 12000 coconuts to be supplied by him. The appellant was prepared to give the amount but insisted on being provided with cheques and A.S.892/1997 3 blank signed non-judicial stamp papers as security. The agreement was that the respondent should give 12000 coconuts to the appellant before 30.5.1993. It was further agreed that on failure to supply the coconuts as agreed, the respondent shall pay the market price of coconuts prevailing at that time. According to the respondent, he could not supply the coconuts before the stipulated date and he had paid an amount of Rs.22,400/- on 26.4.1993 in the presence of Kunhikannan and Gopalan Nair mentioned above. The said payment was entered in the account book of the appellant. Thereafter, the appellant insisted on being paid an exorbitant rate of interest on the balance amount, for which the respondent was not amenable. Thus their relationship got strained. It is further alleged that the respondent had entrusted another blank cheque in favour of one Arappattil Ammad, bearing the same date. The cheques were both presented before the bank with the full knowledge that the account of the respondent was closed. The cheques were deliberately presented and after getting them dishonoured, legal proceedings have been initiated against the respondent. The second cheque issued by the respondent was No: 046018 in the name of Arappattil Ammed mentioned above. Both the cheques are for an amount of Rs.40,000/-. The respondent is A.S.892/1997 4 prepared to pay the balance amount of Rs.11,600/- with interest. 4. On the above pleadings, the suit was tried by the court below after framing the following issues:- i) Whether the defendant had availed a loan of Rs.40,000/- as alleged in the plaint? ii) Whether the partial discharge claimed in the written statement is correct? iii) What is the balance if any, payable by the defendant? 5. The evidence in the case consists of oral testimonies of the P.W.1, D.W1and D.W2 and Exts.A1 to A4 and B1 to B4 documents. 6. After a consideration of the facts and circumstances of the case, the evidence on record as well as the arguments of the rival parties, the Court below found that Ext.A1 was duly executed by the respondent/defendant. However, the Court has found that an amount of Rs.22,400/- had been repaid by the respondent on 26.4.1993 as stated in the written statement. Therefore, the court has held that the appellant was entitled to recover only an amount of Rs.11,600/- from the respondent. It is the above part of the finding of the court below that is challenged in this appeal. 7. The point that arises for consideration is :- A.S.892/1997 5 “Whether the finding of the court below that the defendant has repaid an amount of Rs.26.4.1993 is sustainable?” 8. I have heard the counsel appearing for the rival parties. I have been taken through the pleadings and the evidence in the case, both oral and documentary. Elaborate arguments have also been advanced. 9. According to the counsel for the appellant, the court below has seriously erred in finding that the respondent had paid back an amount of Rs.22,400/-, though there is no reliable evidence to prove such payment. As per the written statement of the respondent, the case put forward is that, since he was not in a position to supply 12000 coconuts as stipulated, he had paid an amount of Rs.22,400/- on 26.4.1993 through Shri. Kunhikannan and Kizhakkeil Gopalan Nair who are mentioned as the persons who were present at the time of borrowing the amount. It is further alleged that at the time of receiving the amount the appellant had made necessary entries regarding receipt of the amount in his account book, in the presence of the witnesses mentioned above. Thereafter, the appellant is alleged to have demanded interest at the rate of 10%, which ended in the disputes A.S.892/1997 6 between the parties. According to the defendant though the cheque was issued for an amount of Rs.40,000/- only an amount of Rs.36,000/- was actually borrowed. On the above aspect, the Court below has considered the evidence on point and has come to a conclusion that the cheque which has been marked as Ext.A1 was duly executed by the respondent and that the amount shown in the cheque is the amount that has actually been borrowed by the respondent. Though the oral evidence of P.Ws 1 and 2 speak of the amount of Rs.36,000/-, the court below has declined to rely on their evidence and has entered a finding that the correct amount borrowed is the amount shown in Ext.A1, which is Rs.40,000/-. The respondent has not challenged the above finding of the court below by filing a cross appeal. Therefore, the said finding has become final and binding on the respondent. In the above circumstances, the only question that requires to be examined is whether the respondent has paid back the amount of Rs.22,400/- on 26.4.1993 as alleged in his written statement. 10. It is pointed out by the counsel for the appellant that the case of the respondent in Ext.B2 reply notice is that he had approached the appellant for borrowing some amount because he was personally in need of money urgently. In his written statement A.S.892/1997 7 also the respondent has reiterated the above position and has maintained that the money was borrowed for his personal need. However, when he was examined as DW1, what he says is that he had borrowed the amount when a friend of his wanted money for the purchase of an immovable property. Therefore, it is pointed out that the respondent has no consistent case regarding the purpose for which the money was borrowed. Further, he elaborates that the amount was borrowed for the purpose of Kunhikannan who wanted to buy some property. Kunhikannan is a witness who has been examined as D.W.2 to prove that an amount of Rs.22,400/- had been repaid to the appellant. 11. With regard to the repayment of the amount of Rs.22,400/-, though the initial case pleaded by the respondent is that he had paid the amount to the appellant, he changes his version when he is examined as DW1. In the box he deposes that he had paid the amount to the person who secured the loan for him. According to him the said person handed over the amount to the appellant in his shop and he entered the receipt of the amount in the account book. Thereafter, he clarifies that the persons who secured the loan for him are Kunhikannan and Gopalan Nair. However, according to D.W.2, the amount of Rs.22,400/- was repaid A.S.892/1997 8 by the respondent in his presence. Further D.W.2 does not speak anything about his need for money. According to him he had gone with D.W.1, for borrowing the money because he was called by D.W.1. D.W.1 had not mentioned about his need to D.W.2. Therefore, the version of D.W.1 that he had borrowed the money to satisfiy the need of D.W.2 does not appear to be true. The version of D.W.2 is that he had sold his property and had given an amount of Rs.30,000/- from the sale price received by him to D.W.1. According to him it is out of the very same amount that Rs.22,400/- was paid by the respondent to the appellant. It has been brought out that D.W2 is the respondent's neighbour and that he is on very good terms with the respondent. In the above circumstances, the oral evidence of D.W.2 when considered in the light of the discrepancies and contradictions pointed out above is not sufficient to justify the conclusion that an amount of Rs.22,400/- had been paid back by the respondent on 26.4.1993 as alleged. When a blank cheque and blank signed stamp papers are alleged to have been given as security for the loan transaction, it is not the normal human conduct to make substantial payment of money without obtaining any receipt. It is also pertinent to note that Kizhakkeyil Gopalan Nair, the other witness is not examined to the transaction A.S.892/1997 9 and no reason has been stated for his non-examination. It is useful to bear in mind that the burden of proving the plea of discharge is squarely on the respondent. In the present case, the evidence available is grossly insufficient to prove the plea of discharge. 12. The court below has found that the appellant has not produced his account books and therefore an adverse inference has been drawn against him. According to the defendant, on receipt of the amount of Rs.22,400/- that is alleged to have been paid on 26.4.1993, the appellant had made an entry regarding receipt of the said amount in his account book. The respondent therefore, filed I.A.323/1997 for an order directing the appellant to produce his account books for the period from March 1993 to March 1997. The appellant has filed an affidavit in answer to his request that he was not maintaining any accounts. It is pointed out by the counsel for the appellant when the appellant has sworn to an affidavit before Court solemnly affirming that he was not having any account books, the adverse inference drawn is without any justification. It is worth noticing that the plaintiff was examined as P.W.1 in the case and he was subjected to cross-examination. There is no material or evidence on record to warrant a conclusion that the appellant was not speaking the truth and that in fact there are account books A.S.892/1997 10 available with him. The reasoning of the court below that since the appellant was a person engaged in a number of businesses, he should be presumed to be having accounts, cannot be accepted. There are many businessmen who carry on business without keeping proper accounts and availability of account books, is not a matter of presumption. Adverse inference can be drawn only in situations where there is positive proof that account books are available and that they were not being produced in spite of their availability. Hence only in such situations can it be presumed that if the said documents are produced they would have disproved the case of the person in custody thereof. The Court below further finds that one A.P.Ammad is a partner of the appellant though there is no evidence or material available to warrant such a conclusion. Though Ext.B3 purports to be a notice issued by the lawyer of the appellant on behalf of one A.P.Ammad to the respondent with respect to another cheque bearing No: 046018, it does not prove that the said person is a partner of the plaintiff and that both the cheques were issued by the plaintiff as security for the same loan transaction. It has come out in evidence that the appellant and Shri. A.P.Ammad are living a few furlongs away from each other. On being questioned, the plaintiff has stated that he A.S.892/1997 11 does not know the said person. In the absence of any evidence to show that the assertion of the plaintiff was wrong, it cannot be presumed that both the cheques were issued in respect of the same transaction. On the above basis, the Court below has come to a conclusion that Ext.A1 does not appear to be issued covering the exact amount of loan advanced to the defendant. It is to be pointed out here that the above finding of the court below is contrary to the earlier finding that the amount given in Ext.A1 is the correct amount borrowed. It therefore follows that the findings of court below on these aspects are wrong and unsustainable. 13. It is worth noticing that Ext.A1 cheque is a negotiable instrument. The execution of the cheque is admitted. It is admitted by the respondent in Ext.B2 reply notice as well as in his written statement that the cheque was issued as a security while borrowing amount from the appellant. As D.W.1 he has deposed that it was in October 1998 that he had issued the cheque and that at that time he had a bank account. The respondent has no case that Ext.A1 cheque is fabricated. Therefore, the presumption under Section 139 is attracted. The burden to prove that the amount shown in the cheque is not due from the respondent is on the person who disputes the amount. The respondent has not A.S.892/1997 12 discharged the said burden which is on him. The cheque on presentation for encashment was returned for the reason that the respondent's bank account had been closed. Though prosecution proceedings under Section 138 were initiated against him, they have ended in acquittal. The respondent was acquitted for the only reason that dishonour of the cheque on the account of closure of bank account could not constitute the offence under Section 138 of the Negotiable Instruments Act. In the above circumstances it has to be held that the appellant is entitled to a decree for recovery of the amount of Rs.40,000/- covered by Ext.A1 cheque with 12% interest from 7.6.1993 till the date of suit and thereafter at the rate of 6% per annum till the date of realization. The parties are allowed to realize proportionate costs. The appeal is allowed, the judgment and decree of the court below are set aside and O.S.165/95 is decreed as above. No Costs. K. SURENDRA MOHAN Judge jj A.S.892/1997 13 A.S.892/1997 14 K.K.DENESAN & V. RAMKUMAR, JJ. ---------------------------------------------------- M.F.A.NO: ----------------------------------------------------- JUDGMENT Dated: