Tufail Ahmad vs Naseem

Mahendra Dayal, J.—The defendant-appellant, feeling aggrieved by the judgment and order dated 24.01.1996 passed by the First Additional District Judge, Bahraich, in Civil Appeal No. 107 of 1995, has filed this second appeal.

The brief facts of the case are that the plaintiff-respondent filed a suit for recovery of Rs. 28,325/- with the allegation that he was proprietor of Naseem Engineering Company, Bahraich while the defendant-appellant had also been doing business in the name of Kisan Centre. It was further stated that the defendant-appellant used to take loan from him whenever he was short of finance and in the series of these transactions, he took Rs. 5000/- on 26.03.1990 by means of cheque, and subsequently, on 30.03.1990 he took Rs. 3000/- by means of another cheque and when the plaintiff-respondent demanded the aforesaid amount, the defendant-appellant returned the same. The plaintiff-respondent was, therefore, under the impression that whenever any amount would be taken by the defendant-appellant by way of loan, the same would be returned to him in due course of time. Under the aforesaid impression, the plaintiff-respondent gave him Rs. 20,000/- by means of two different cheques dated 04.07.1991 and 20.08.1991 which the defendant-appellant had assured to return but inspite of repeated demands, the said amount was not returned. The plaintiff-respondent then issued a notice on 21.09.1993 by registered post calling upon him to pay the entire amount due along with interest. The defendant-appellant inspite of service of notice upon him, did not pay the aforesaid amount.

The defendant-appellant contested the suit and filed his written statement in which he stated that he did not take any amount by way of loan from the plaintiff-respondent. In fact, the plaintiff-respondent used to take money from him in connection with his business and on his assurance he had given him some amount. It was further stated in the written statement that the plaintiff-respondent had taken loan from District Industries Centre and since he was not in a position to re-pay the loan with interest, he took money from the defendant-appellant and it was on account of the said loan that the plaintiff-respondent gave him two cheques of Rs. 10,000/- each which was subsequently encashed. The said amount was not given by way of any loan and as such the plaintiff-respondent was not entitled to any amount and the suit was liable to be dismissed.

The learned trial court on the basis of pleadings of the parties framed as many as seven issues and on the basis of evidence on record came to the conclusion that the plaintiff-respondent has failed to prove that he gave loan of Rs. 20,000/- to the defendant-appellant and as such he was not entitled to recover any amount from the defendant-appellant. With the aforesaid finding, the suit of the plaintiff-respondent was dismissed with cost.

Feeling aggrieved by the judgment and decree passed by the learned trial court, the plaintiff-respondent preferred an appeal before the District Judge, Bahraich which was heard and disposed of by the First Additional District Judge, Bahraich the learned First Appellate Court while reversing the finding recorded by the trial court, allowed the appeal and decreed the suit of the plaintiff-respondent with cost throughout.

I have heard learned counsel for the parties and was also gone through the record.

Learned counsel for the appellant has argued that it was the specific case of the plaintiff-respondent that the amount of Rs. 20,000/- was paid to the defendant-appellant by way of loan while there was absolutely no evidence to the effect that the said amount was given to him by way of loan. Nothing of that sort was either mentioned in the cheques nor there was any such agreement between the parties. He has further submitted that in view of the provision of the Negotiable Instruments Act, 1881, the holder of a cheque is the person who is entitled in his own name to the possession thereof and to receive the amount due thereon. He further submits that there is no dispute with regard to the fact that the cheques were issued by the plaintiff-respondent in favour of the defendant-appellant, and therefore, the defendant-appellant became the holder in due course by operation of law. He was, therefore, entitled to receive the amount mentioned in the cheque. Learned appellate court ignoring the aforesaid settled legal position presumed that the amount must have been paid by the plaintiff-respondent by way of loan while as a matter of fact there was nothing on record to indicate that the defendant-appellant ever took any loan from the plaintiff-respondent. It has further been argued by the learned counsel for the appellant that the learned First Appellant Court has reversed the finding recorded by the learned trial court without giving any cogent reason as to why the finding recorded by the learned trial court was wrong or was liable to be reversed. The learned appellate court merely on the basis of assumption has presumed that since both the parties are engaged in business and while doing business the persons engaged in the business normally take loan from each other in case of financial difficulty and as such the defendant-appellant must have taken loan from the plaintiff-respondent. Since the plaintiff-respondent had come up with a specific case that the defendant-appellant took loan of Rs. 20,000/-, it was the burden of the plaintiff-respondent to have proved that the defendant-appellant had actually taken loan of Rs. 20,000/- from him with promise to re-pay the same along with the interest. There is neither any oral nor the documentary evidence to show that the aforesaid amount of Rs. 20,000/- was given to the defendant-appellant by way of loan and was to be returned with interest. Learned First Appellate Court has committed gross illegality in recording a finding that the defendant-appellant took loan, which is based on surmises ad conjectures.

Learned counsel appearing on behalf of the respondent has submitted that one of the substantial questions of law formulated by this Hon''ble Court is as to whether the plaintiff-respondent being a professional money lender could maintain a suit for recovery of money in the absence of registration as a money lender under the provisions of U.P. Regulation of Money Lender Act, 1976. He submits that it is not the case of the plaintiff-respondent that he was a professional money lender. In these circumstances, the plaintiff-respondent was not obliged to get himself registered as money lender. Thus, the argument advanced on behalf of the defendant-appellant to the effect that the suit was not maintainable for want of registration, has no force. I find substance in the arguments advanced on behalf of the plaintiff-respondent that it was nobody''s case that the plaintiff-respondent was a professional money lender and, therefore, he was not required to get himself registered as money lender and the suit filed by him for recovery was maintainable. However, with regard to the advancement of loan to the defendant-appellant, the submission of the plaintiff-respondent is without any basis inasmuch as there is no evidence on record to indicate that the said amount was given to the defendant-appellant by way of loan.

Undisputedly, the cheques were issued in the name of the defendant-appellant and in view of the provisions of Negotiable Instruments Act, the defendant-appellant became the holder in due course and was thus entitled to receive the amount mentioned in the cheques. The controversy between the parties is that the said amount paid to the defendant-appellant was to be re-paid along with interest, but as indicated earlier there is no evidence to this effect. There cannot be a presumption that if anybody issues a cheque to another, the same would be treated as loan. The case of the defendant-appellant is that, in fact, the plaintiff-respondent used to take money from him in connection with his business and it was on account of the said money taken by him that the plaintiff-respondent re-paid the said amount by way of two cheques, but there is also no evidence to this effect. Thus, in the absence of any concrete evidence, the only thing which is borne out from the facts of the case, is that the plaintiff-respondent gave Rs. 20,000/- to the defendant-appellant by issuing two cheques and the cheques were drawn in the name of the defendant-appellant and by virtue of law, he became the holder of the instrument. There was absolutely no evidence to show that the said amount was paid to the defendant-appellant by way of loan. The findings recorded by the learned First Appellate Court are based on assumptions without any basis and as such the judgment and order passed by the learned First Appellate Court can not be allowed to stand and are liable to be set aside.

The first substantial question of law formulated in this second appeal is to the effect as to whether a contract of money lending could be inferred without any evidence only on the basis of money having been paid by the cheques. This court on the basis of the material on record and the relevant law is of the view that a contract of money lending can not be inferred without there being any evidence to that effect. Thus, payment of money by means of the cheques can not be deemed to be a loan.

In view of what has been discussed above, the second appeal succeeds and is hereby allowed. The judgment and decree passed by the First Appellate Court dated 24.01.1996 passed by the First Additional District Judge, Bahraich is set aside and the judgment and decree passed by the learned trial court in Regular Suit No. 315 of 1993 is hereby affirmed. There will be no order as to cost in the circumstances of the case.