M/S SURETEX PROPHYLACTICS INDIA PRIVATE LIMITED vs. THE COMMISSIONER OF CENTRAL EXCISE

Heard Shri. S. Gangadhara Aithal, learned Advocate for the appellants/defendants and Smt. S. Susheela, learned Senior Advocate for the respondent/plaintiff.

For the sake of convenience parties shall be referred as per their ranking in the Trial Court.

Plaintiff has brought the instant suit against the legal representatives of one deceased H. Nagaraj for recovery of a sum of Rs.25 Lakhs. The suit has been decreed. Feeling aggrieved, defendants have preferred this appeal.

Plaintiff’s case is, he and deceased Nagaraj were known to each other since their childhood days. Nagaraj was in need of finances to purchase properties in Gandhinagar, Bengaluru. He had approached the plaintiff for financial accommodation to purchase the properties promising him to repay the debt or in the alternative, to give him one of the

Nagaraj passed away on 20.01.2006. Plaintiff presented the cheque after his death and it was dishonoured by the bank. Plaintiff approached first defendant and she refused to recognize any liability. Nagaraj had no source of income to invest and purchase the properties, except with the aid and assistance of plaintiff and his brother-in-law.

Plaintiff caused a legal notice dated 24.05.2007 to the defendants demanding repayment of Rs.25 Lakhs within 15 days therefrom. Defendants replied contenting inter alia

In the written statement, defendants have contended that Nagaraj had never approached the plaintiff for any financial assistance; that there was no occasion for him to borrow money; that plaintiff’s brother-in-law Vijaykumar had also made similar allegation that Nagaraj had borrowed Rs.20 Lakhs from him; that Nagaraj had purchased three shops under Sale deed dated 21.08.1997 and two more shops in 2004. Nagaraj had purchased all the properties from out of his savings and income from his wife’s shop; and borrowing some money from wife’s parents. While purchasing the two shops in 2004, Nagaraj had sold gold ornaments to raise money. It is further contended that Nagaraj was a drunkard and passed away on account of his vice. Defendants have denied other allegations contained in the plaint.

Based on the pleadings, the Trial Court has framed following issues: 1. Whether the plaintiffs proves that defendant’s father has issued a post dated cheque for Rs.25,00,000/- on 27.03.2007?

Whether the said H. Nagaraj borrowed the said amount for purchase of the property as stated in the plaint?

Whether the defendant proves that they are not liable to pay the amount to plaintiff?

Whether the plaintiff is entitled for the relief sought for?

What order or decree?

During the trial, plaintiff got examined himself as P.W.1 and got marked Exs. P1 to P23. On behalf of the defendants, second defendant was examined as D.W.1 and Exs. D1 to D27 marked.

Answering issues No.1, 2 & 4 in the affirmative and issue No.3 in the negative, the Trial Court has decreed the suit.

Shri. Aithal, for the defendants, praying to allow this appeal, mainly contended that:  plaintiff has not paid any money to Nagaraj. He has admitted in his cross-examination that he had lent money between 1997 and 2006; that he was maintaining accounts, but the transactions made with Nagaraj were ‘unaccounted’;  the learned Trial Judge has not appreciated the list of admissions made by plaintiff, contained in para 14 of the Memorandum of Appeal;  plaintiff’s brother-in-law, one N.K. Vijaykumar had also made a similar attempt to make unlawful gain by filing O.S.No.4932/2007 seeking recovery of Rs.20 Lakhs, against Nagaraj on the basis of a cheque alleged to have been tendered by Nagaraj. The said suit has been dismissed on merits;  Nagaraj had purchased three shops for Rs.2.40 Lakhs in 1997, two shops for Rs.1.60 Lakhs and Rs.1.85 Lakhs in 2004; and one shop for Rs.7.20

Smt. Susheela, for the defendants, arguing in support of the impugned judgment and decree contended that:

Adverting to defendants’ contention that the cumulative value of the properties purchased was about Rs.13 Lakhs and therefore, plaintiff’s claim of lending Rs.25 Lakhs to purchase the properties was false, Smt. Susheela submitted that the actual value paid for acquiring the properties was more than what is mentioned in the Sale deeds.

With regard to limitation, Smt. Susheela urged that as per Section 18 of the Limitation Act, 1963, payment by cheque amounts to acknowledgment of debt and consequently, the limitation is saved.

With the above submissions, Smt. Susheela prayed for dismissal of this appeal.

We have carefully considered rival contentions and perused the records.

In the light of the discussions, following points arise for our consideration:

In substance, plaintiff’s case is that he had given money to Nagaraj on various dates to purchase properties. Nagaraj had promised to repay the money or give one of the shops purchased by him. Nagaraj had issued a post-dated

Shri. Aithal has strongly relied upon paragraph No.14 in the Memorandum of this appeal and contended that the learned Trial Judge has failed to consider plaintiff’s admissions in the cross-examination. The said paragraph reads as follows: “14. The learned judge has failed to consider the following admissions of the plaintiff during the course of his cross examination, apart from other admissions, which were sufficient to dismiss the suit; "I lent money to the husband of the first defendant in between 1997 and 2006. I cannot say the exact date of lending money and exact amounts lent to the husband of 1st defendant, Whenever I lend money to somebody I maintain its accounts in my books. I have not noted the amounts received by me in my books. I have not reflected the said amounts in my income tax returns. It is true that it is my duty to disclose all accounts savings and loan if any lent to somebody. I have maintained my books of accounts from 1997 till 2006. I have maintained day book and ledger. I have not mentioned the amounts lent to Nagaraj in my day books and ledger. The transactions made with Sri Nagaraj are un accounted. Apart from this transactions my all other transactions are accounted. The

He has taken us through the entire cross- examination of P.W.1 and it matches with the extracts of the cross-examination mentioned in paragraph No. 14 of the memorandum of appeal.

A careful reading of evidence of P.W.1 shows that he was running a textile printing business. He had no other source of income except from that business. He had maintained books of accounts from 1997 till 2006 which included day book and ledger. He had not shown the amounts

The cheque is dated 27.03.2007. According to plaintiff, he had lent money between 1997 and 2006. The details of payments are not mentioned in the plaint. The suit has been presented on 11.07.2007 for recovery of debt which according to the plaintiff had accrued between 1997 and 2006. It is settled that acknowledgement of debt after expiry of limitation period is unenforceable (See Sampuran Singh Vs. Niranjan Kaur2). Smt. Susheela has urged that issuance of cheque amounts to acknowledgement of debt under Section 18 of the Limitation Act. Plaintiff has produced following four Sale deeds executed in favour of Nagaraj: Sl. No. Date of Execution Consideration 1 21.08.1997 2.4 lakhs 2 02.4.2004 1.85 lakhs 3 02.4.2004 1.60 lakhs 4 31.08.2005 7.20 lakhs

The above tabular column shows that the first three Sale deeds were executed prior to 12.07.2004. There is no acknowledgement of debt in respect of the money lent to acquire the said properties. Hence, they are clearly time barred. So far as the last Sale deed is concerned it is dated 31.08.2005. The consideration amount shown in the Sale Deed is Rs. 7.20 Lakhs. The details of the money lent to acquire the properties are not forthcoming in the plaint.

Smt. Susheela, vehemently contended that as per Sections 118 and 139 of the Act, it must be presumed that the consideration had passed. But, such presumption is rebuttable and Shri. Aithal has rightly placed reliance on Vijay Vs. Laxman3, wherein it is held that the presumption under the said provisions is rebuttable. Nagaraj would have been the best witness to rebut the presumption, but the cheque has been presented after his death.

It was also submitted by Shri. Aithal that instructions were given by Nagaraj’s wife who was keeping indifferent health and suffering from epilepsy; and she was not in sound mind. It is relevant to note that P.W.1 has also admitted that Nagaraj’s wife was suffering from epilepsy.

It is settled that only legally enforceable debt can be claimed based on a dishonoured cheque. It is surprising to note that according to the plaintiff, all other transactions except the one with Nagaraj were accounted. Shri. Aithal has relied upon G.Pankajakshi Amma and Others Vs. Mathai Mathew (Dead) Through LRS and Another4, wherein, it is held as follows: “10. There is another (sic) reason also why the impugned judgment cannot be upheld. According to the 1st respondent these transactions were to be unaccounted transactions. According to the 1st respondent, all these amounts are paid in cash. If these are unaccounted transactions then they are illegal transactions. No court can come to the aid of the party in an illegal transactions. It is settled law that in such cases the loss must be allowed to lie where it falls. In this case as these are unaccounted

Smt. Susheela has placed reliance on the following authorities: (i) Kishan Rao Vs. Shankar Gowda5 ; This is a case under Section 138 of the Act. It was contended by Smt.Susheela that presumption under Section 139 of the Act will exist till the contrary is proved by the accused. We may record that in that case, no evidence was led by the accused nor did he examine any witness. But in the present case, the cheque has been presented after the death of the drawer, Nagaraj. His daughter has got herself examined as D.W.1. Plaintiff has not placed any material to support the transaction.

One another contentions urged by the defendants is that Nagaraj was an alcoholic. Plaintiff has also admitted the same in his cross-examination.

The learned Trial Judge has recorded in para 20 of the impugned judgment that Nagaraj and plaintiff were friends for 20 years and it is possible that documents were not maintained. This view is untenable in view of the law laid down in G.Pankajakshi Amma.

Thus plaintiff’s admissions in the cross-examination demolishes his case so far as, existence of legally enforceable debt is concerned. There is absolutely no material to accept plaintiff’s contention that he had lent Rs.25 Lakhs between 1997 and 2006.

In view of plaintiff’s specific admissions in his cross-examination with regard to his source of income, all his transactions except the one with Nagaraj being accounted and he being an income tax assessee leads an irresistible inference that plaintiff has not lent money to Nagaraj. It is also settled that plaintiff is duty bound to aver and prove his case. In the absence of specific pleading with regard to the dates of lending and the amount lent, it shall not be lawful to decree the suit.

Hence, we hold that no consideration had passed for issuance of the cheque.

In view of the aforesaid findings, we answer point No. (i) in the negative.

For the reasons recorded hereinabove, this appeal merits consideration. Accordingly, point No.(ii) is answered in the affirmative.

Hence, the following: ORDER (i) Appeal is allowed. (ii) Judgment and decree dated September 17, 2016 in O.S. No.5334/2007 is set-aside. (iii) Suit is dismissed. No costs.