Kapurt Investments Pvt. Ltd. vs D. Vinod Sivappa

A.S. Bopanna, J.—The appellants herein are the plaintiffs in O.S. No. 8864/2004. The suit in question was filed by the plaintiffs seeking to recover the amount of Rs. 10,60,553/- indicated therein as the interest being due and payable in respect of the loan of Rs. 15 lakhs which had been advanced to the defendant. The Court below after considering the rival contentions has dismissed the suit. The plaintiffs are therefore before this Court assailing the said judgment. The brief facts are that the plaintiffs are a company which is registered in accordance with law. The plaintiffs being engaged in the business of providing financial assistance had been approached by the defendant for loan. In that regard a sum of Rs. 15 lakhs had been advanced by the plaintiffs to the defendant on 21.08.1999. The said amount was agreed to be repaid with interest at the rate of 18% per annum. Since the said amount had accrued interest, accordingly a sum of Rs. 19,27,500/- was due as on 31.03.2001. The defendant is stated to have paid a sum of Rs. 90,000/-and as such the balance as on the said date remained at Rs. 18,37,500/-. The defendant therefore issued the cheque dated 25.06.2001 for a sum of Rs. 3,37,500/-which was the interest portion of the amount and another cheque of even date for a sum of Rs.15 lakhs which was the principal amount which had been advanced. However, on presentation of the said cheques the same were returned with the endorsement that it is being returned as the funds in the account held by the defendant is insufficient to honour the said cheques. The plaintiffs therefore initiated proceedings u/s 138 of the Negotiable Instruments Act and the case was registered in CC No. 27204/2001. The case of the plaintiffs is that since the said amount of Rs. 15 lakhs was still outstanding and in addition the interest was also not paid, the principal amount continued to accrue interest even thereafter. Hence the instant suit was filed claiming the interest for the periods from 31.03.2001 upto 23.06.2004 that is the date on which the cheque towards the principal amount had been paid. It is therefore contented that the amount had accrued interest which was payable by the defendant as claimed in the plaint.

The defendant on entering appearance did not dispute the fact that the defendant had borrowed a sum of Rs. 15 lakhs and the interest that was agreed to be paid at the: same rate as stated by the plaintiffs. However the contention which was putforth in the written statement is that while disbursing the amount only a sum of Rs. 13 lakhs had been paid and as such a portion was held back towards interest. That apart the contention in the written statement is that during the pendency of the complaint under Negotiable Instruments Act in CC No.27204/2001 the amount of Rs. 18,37,500/- had been paid and therefore the same constitutes discharge of the entire amount which was due and payable to the plaintiff. Hence, it is contended that no further amounts are due from defendant to the plaintiffs.

The Court below after taking note of the rival contentions has framed six issues for its consideration which read as hereunder;

Does plaintiff proves that defendant borrowed Rs. 15,00,000/- from plaintiff on 21.8.99 and execute promissory note undertaking to repay the said amount with interest at 11/2 p.m. ?

Was an amount of Rs. 90,000/- paid by defendant towards interest and after adjustment of said amount defendant still due Rs : 18,37,500/-?

Did defendant acknowledge his liability to pay the above debt by means of letter dated: 31.3.2001?

Did defendant made a payment of Rs. 100/-on 13.8.2002?

Issue No. 4 is recasted and framed as follows: Did defendant made a payment of Rs. 1000/-on 13.8.2002?

Does defendant prove that the plaintiff withdrew the criminal case i.e. C.C.27204/2001 against defendant upon full settlement of claim in relation to sit transaction as alleged in para 3 and 6 of W.S.?

Is the suit bared by time?

The plaintiffs in order to discharge the burden cast had examined one Sri. Kamal Kapoor as PW1 and relied upon documents as Exs. P1 to P8 in support of the claim. The defendant examined himself as DW1 and the document at Ex. D1 was relied upon. The Court below on analysing the same has arrived at the conclusion that the plaintiffs are not entitled to the relief claimed.

The learned counsel for the appellants while assailing the judgment would make specific reference to the observation made by the Court below on Issue No. 5. The contention of the learned counsel is that the Court below has not properly assessed the material available on record. It is pointed out that the money was advanced as loan and a particular rate of interest was agreed to be paid by the defendant. The criminal proceedings initiated in CC No. 27204/2001 was for punishing the defendant for committing the offence and the cheques which were dishonoured. The scope of the said proceedings would be only to that extent and not with regard to the interest which was accrued even if the amount was paid and punishment was avoided. In that context it. is contended that when the cheques for payment of the amount of Rs. 18,37,500/- were dishonoured and one of the cheques being for the principal amount of Rs.15 lakhs, the amount advanced would remain unpaid till the amount was discharged by the defendants. Therefore the payment in the criminal proceedings towards the dishonoured cheques would only be repaying of the principal amount as on that date and until the said amount was discharged the same would continue to accrue interest and therefore the plaintiffs have sought the interest from 01.04.2001 upto 23.06.2004 on which date the amount was repaid. It is therefore contended that when the rate of interest is not in dispute the loan amount was liable to be paid with interest. It is in that context contended that the application filed in the criminal proceedings does not. indicate that there was any compromise between the parties for the defendant to contend that the said amount was received in full and final settlement of the claims. It is therefore contended that the judgment is not sustainable and the same is liable to be set-aside and the suit is to be decreed.

It is to be noticed at this juncture itself that though the claim was made before the Trial Court for Rs 10,60,553/-, on appropriate calculation, the actual amount due towards interest would be in a sum of Rs. 8,44,700/-. In that regard a memo of calculation is filed by the learned counsel for plaintiff and the amount is limited to that extent. The memo is taken on record.

In the light of the contentions putforth in this appeal, I have perused the materials on record and have referred to the evidence tendered by the parties.

As noticed from the contention putforth by the defendant, the fact that the defendant had secured the loan of Rs. 15 lakhs from the plaintiffs on 21.08.1999 is not in dispute. In that regard the documents at Exs. P2 and P3 would indicate that the amount was agreed to be repaid with interest at the rate of 11/2% per 30 days which undisputedly would work out to 18% per annum.

The confirmation of balance marked as Ex. P4 indicates that the defendant had acknowledged the principal amount of Rs. 15 lakhs being due and also interest of Rs. 3,37,500/- which was due as on 31.03.2001. The documents at Exs. P5 and P6 are the cheques which had been issued separately in respect of interest and the principal amount stated above. These aspects of the matter would indicate that the amount of loan advanced was Rs. 15 lakhs and the interest which had accrued as on 31.03.2001 was the amount for which a separate cheque had also been issued. The question therefore is with regard to the interest from 01.04.2001 till the principal amount of Rs. 15 lakhs was repaid on 23.06.2004.

The defence putforth in the instant suit is not with regard to the rate of interest or that the interest has been discharged. The contention which was urged is that in the criminal proceedings the entire amount due has been discharged and therefore the question of paying the interest does not arise. It was also suggested to PW1 in his cross examination that there was an agreement between the parties and therefore the amount has been paid. However, PW1 has denied the said suggestion and has stated that the cheques paid was only towards the dishonoued cheques. When such suggestion was putforth by the defendant to PW1 which was denied the burden was on the defendants to place material on record to show that there were negotiations between the parties before the amount was paid in the pending criminal proceedings and there was an agreement that on discharge of the amount which was claimed in the criminal proceedings towards the dishonoured cheques the defendant would not be liable to pay any further amount. No doubt the application which had been filed by the plaintiffs in the criminal proceedings was confronted to PW1 and was marked in evidence as Ex. D1. On perusal of the said application it would indicate that what was submitted by the accused therein is that he has paid the outstanding amounts due under the ''present cheques'' and it is in that regard the complainant desires to withdraw the complainant as not pressed,. Infact, the said application and the cheques paid in the said proceedings is the issue to be considered as to whether that would constitute that the entire amount has been discharged or whether the defendant would still remain liable in law to pay the interest towards the principal amount from 01.04.2001 till it was repaid on 23.06.2004.

This being the bone of contention the matter requires to be looked into from that angle. The application as noticed does not suggest that it is in settlement of all claims. Hence the scope of the proceedings under the Negotiable Instruments Act. would have to kept in view. The said proceedings is not in the nature of a civil suit for recovery of the amount shown in the dishonoured cheque. However in such complaint for punishment for the offence the amount could paid and settled. In the instant case what is paid is the amount which represented the dishonoured cheque but there is no other, understanding between the parties for waiving the accrued interest. In that light if the. transaction between the parties is noticed, the loan as paid is not in dispute. Further as noticed above even the cheques which were issued at an earlier point and were dishonoured were two separate cheques, one for the principal amount and other for interest accrued as on 31.03.2001. Therefore, unless the defendant was able to place any cogent material on record to show that there was settlement between the parties and what was paid was in full and final satisfaction and the plaintiffs had given up their claim for interest from 01.04.2001 till 23.06.2004 the claim for interest would survive. When the amount of Rs. 15 lakhs had remained unpaid till 23.06.2004 on account of the cheque being dishonoured, the case of the defendant cannot be accepted.

In that light a perusal of the papers as noticed would indicate that the claim made is in respect of the interest amount for the said period during which the principal amount remained unpaid. However as noticed, the claim made is slightly in excess due to certain mis-calculation. Hence, if the correct calculation as per the memo of calculation filed before this Court is taken into consideration the amount due would be in a sum of Rs. 8,44,700/- and not as claimed. Hence the said amount in any event would be payable by the defendant to the plaintiffs.

In that background, if the finding rendered by the Court below is once again perused it would indicate that Court below has not considered the matter in its correct perspective. Hence the finding on Issue No. 5 which is held in affirmative cannot be sustained. If in that context the finding on the other issues are taken into consideration and the finding on Issue No. 5 is corrected in terms of the above the plaintiffs are entitled to recover the interest of Rs. 8,44,700/-. In the result the appeal is allowed in part. The judgment and decree dated 19.06.2010 passed in OS No. 8846/2004 is set-aside. Consequently the suit in OS No. 8846/2004 is decreed in part and it is held that the plaintiffs are entitled to recover the sum of Rs. 8,44,700./- from the defendant with proportionate costs.

The decree be drawn in the above terms.