A.C. Clarance v. T.J. Antony

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE P.BHAVADASAN** **FRIDAY, THE 23RD DAY OF MAY 2014/2ND JYAISHTA, 1936** ## **RSA.No. 1319 of 2013 ()** **-----------------------...............................** **AS.NO. 46/2012 OF SUB COURT, KOCHI** ## **OS.NO. 263/2011 OF ADDITIONAL MUNSIFF COURT, KOCHI** **-----------------------** ## **APPELLANT/ RESPONDENT/ DEFENDANT`:** **----------------------------------------------------------------** **A.C. CLARANCE,S/O.CLAMENT, AGED 58 YEARS, ATHIPOZHI HOUSE, MANASERY, MUNDAMVELI, KOCHI- 682 005** **BY ADV. SMT.M.A.ZOHRA** ## **RESPONDENT/ APPELLANT/ PLAINTIFF:** **------------------------------------------------------------** **T.J. ANTONY, S/O JOSEPH,AGED 51 YEARS, THERATH HOUSE, KANNAMALI P.O., KOCHI- 8** **BY ADVS. SRI.SANTHOSH G. PRABHU SRI.S.KANNAN SMT.A.ASWATHY** **THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 23-05-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **sts** **P.BHAVADASAN, J. -----------------------------------------------Regular Second Appeal No.1319 OF 2013 -----------------------------------------------Dated this the 23[rd] day of May, 2014.** ## **J U D G M E N T** The defendant in O.S.No.263/2011 on the file of the Munsiff Court, Kochi who was slapped with a decree for money by the lower appellate court is the appellant. The facts absolutely necessary for the disposal of the appeal are as follows: 2. The plaintiff alleged that the defendant had occasion to borrow a sum of Rs.50,000/- from him executing Ext.A1 demand promissory note dated 15.12.2008. The amount was not repaid in spite of notice issued to the defendant. That resulted in the suit. 3. The defendant resisted the suit pointing out that there was no monetary transaction between him and the plaintiff and that he had in fact borrowed a sum of Rs.50,000/- from DW2 who, at that point of time, insisted that the defendant hands over a signed blank stamp paper worth Rs.50/- which was so done by the defendant. The defendant however contended that though **R.S.A No.1319/2013** **2** the said amount of Rs.50,000/- was repaid with 5% interest, the signed blank paper given by him was not returned. It was specifically contended that no demand promissory note as alleged in the plaint has ever been executed by the defendant nor did the defendant have any monetary transactions with the plaintiff. 4. On the basis of the pleadings, issues were raised by the trial court. The evidence consists of the testimony of PW1 and the documents marked as Exts.A1 to A4. The defendant examined DWs 1 and 2. The trial court has held that the execution of the document has not been proved and also that since the document is drawn up on a stamp paper, it cannot be treated as demand promissory note in view of the decision in _**Sadasivan K** vs._ _**B. Unnikrishnan Nair**_ (2011 (4) KHC 393). The suit thus came to be dismissed. 5. On appeal by the plaintiff, though the lower appellate court concurred with the trial court regarding the invalidity of the demand promissory note for being insufficiently stamped, the court was of the view that the suit could be treated as one of original cause of action and taking the aid of Section 118 of the **R.S.A No.1319/2013** **3** Negotiable Instruments Act, it came to the conclusion that consideration has passed from the plaintiff to the defendant. Pointing out that there was no evidence of repayment and also on the ground that the defendant did not respond to the notice issued by the plaintiff, the suit was decreed. Hence this R.S.A. ## 6. The following substantial question of law is seen formulated in this memorandum of appeal. Can the court of First Appeal dig into evidence and probe into unexisting pleadings to decree a suit on probabilities and preponderance of evidence reversing the decree of the trial court resting on proper appraisal of pleadings and evidence? 7. Learned counsel appearing for the appellant pointed out that the lower appellate court was unjustified in creating a case which the plaintiff himself did not have and granting a decree on that basis. The definite case put forward by the plaintiff was that on execution of Ext.A1 document, a sum of Rs.50,000/- was handed over to the defendant. Further case of the plaintiff was that funds were raised by him by taking a loan from the society and in the loan application, the defendant had signed. In spite of the definite denial of execution of Ext.A1, it is significant to **R.S.A No.1319/2013** **4** notice, according to the learned counsel, that the plaintiff was shy to examine the witnesses who are said to have witnessed the due execution of Ext.A1 document. Neither the handing over of money nor the execution of the document is thus proved. The lower appellate court erred both on facts and in law in decreeing the suit, it is contended. 8. Learned counsel appearing for the respondent contended that the findings of the courts below that the promissory note being drawn up on a stamp paper and insufficiently stamped, the defect can be cured in the light of the subsequent amendment to Stamp Act, 2006 and if that be so, the principles laid down in the decision cited above cannot apply to the facts of the case. By the amendment of 2006, according to the learned counsel for the respondent, even insufficiently stamped promissory note can be impounded. According to the learned counsel, apart from the above fact, even on facts and on evidence, the lower appellate court was justified in entering a conclusion that the defendant had received the amount and not repaid the same. 9. It is admitted by DW2 that an amount of Rs.50,000/- **R.S.A No.1319/2013** **5** was received from the plaintiff and that was handed over by him to the defendant. Even assuming it to be true, for the sake of argument, when the defendant came to know that the so called blank stamp paper signed by him has been misused by the plaintiff, he takes no action against the plaintiff. Further it is also important to notice that the defendant thought it unnecessary to reply to the notice issued by the plaintiff. Again, the contention that the defendant had repaid the amount borrowed from DW2 and DW2 had handed over the amount borrowed by him from the plaintiff is also not proved. In the light of the fact that DW2 has admitted in the box that Rs.50,000/- was received from the plaintiff and it was handed over to the defendant, there is no burden on the plaintiff to show that he had the capacity to raise funds. Even assuming that the lower appellate court may not be justified in its approach, there is no reason not to get the demand promissory note back. It is for the defendant to show that the amount borrowed from the plaintiff has been discharged. At any rate, the plea of discharge by DWs 1 and 2 has not been proved. Further, it is pointed that the suit was laid long after the notice **R.S.A No.1319/2013** **6** was issued and even going by the evidence furnished by the defendant, he knew that the plaintiff had a weapon to use against him and still he does nothing. In the light of these facts, the decree granted by the lower appellate court does not warrant any interference. 10. Fortunately for this Court, both the counsel did not seriously contest the issue as to whether an insufficiently stamped promissory note could be impounded. Even it is so contended it cannot serve any purpose for the simple reason that consequent to the amendment to Stamp Act, 2006, promissory note becomes impoundable. Reliance placed by the courts below on the decision referred to above cannot apply to the facts of the case. 11. More serious issue that needs to be addressed is regarding the execution of Ext.A1. Surprisingly enough, even when execution was denied, the plaintiff did not feel it necessary to examine any one of the witnesses to the document. He has a definite case that the defendant affixed his signature in the document in his presence and in the presence of the witnesses. **R.S.A No.1319/2013** **7** The above aspect was taken note of by the trial court to enter a finding against the plaintiff. However, the lower appellate court went on to hold that even assuming that Ext.A1 document cannot be accepted in evidence, the suit could lie on the original cause of action and on a reading of the plaint and the evidence of the plaintiff, it could be said that Ext.A1 is only a memorandum of loan which has already been transacted. 12. One cannot omit to note that notice sent by the plaintiff has been received by the defendant. Going by the evidence of DW2 and the averments in the written statement and also the case of DW1, as soon as the defendant received the notice, he approached the plaintiff and met DW2 who promised to clear off the liability. The defendant would say that he believed the words of DW2 and did nothing further in the matter. Even assuming that the finding of the lower appellate court that merely because signature on the document is admitted, its due execution cannot be implied, still the fact remains that money has gone from the hands of the plaintiff. It is here that one has to notice that neither DW1 nor DW2 has produced any document to show that **R.S.A No.1319/2013** **8** they have repaid Rs.50,000/- either to DW2 or to the plaintiff respectively contended by them. In this regard, it must be noticed that DWs 1 and 2 have a common interest. Therefore, the assertion by DW2 that DW1, the defendant had repaid Rs.50,000/- on demand cannot be easily accepted. 13. Learned counsel appearing for the respondent may be justified in its submission that the contention that the source of funds has not been proved cannot be very immaterial in the light of the evidence adduced by the defendant. The fact remains that DW2 has categorically stated in the box that the money given to the defendant was obtained from the plaintiff. If that be so, the defendant could not rely on paucity of funds with the plaintiff. However, it may be difficult to accept the finding of the lower appellate court that the suit is based on original cause of action The above aspects have been omitted to be noticed by the court below. 14. One may also mention here that even after repaying a sum of Rs.50,000/- after paying interest as claimed by DW2, there was no attempt from the side of the defendant, going by **R.S.A No.1319/2013** **9** the evidence on record, to show that he had made any effort to get the signed blank stamp paper returned. One may also notice that even though the defendant came to know that the signed blank paper has been misused by the plaintiff, he takes no steps in that regard. Further, even accepting the case of the defendant that he had along with the plaintiff gone to DW2 who promised to discharge the liability due to the plaintiff, it is difficult to believe that the defendant would have let the things lie there and would not have bothered to verify whether the liability was discharged especially when the plaintiff was armed with a document said to have been executed by the defendant. These aspects require consideration at the hands of the courts below. This Court is therefore unable to accept the finding of the lower appellate court and it is felt that the matter needs to be gone into afresh by the trial court. For the above reasons, this appeal is allowed. The impugned judgment and decree are set aside and the matter is remanded to the trial court for fresh disposal in accordance with law and in the light of what has been stated above. The parties **R.S.A No.1319/2013** **10** shall appear before the trial court on 24.06.2014. The parties are at liberty to adduce further evidence if they so chose. The matter shall be disposed of within a period of six months from the date of appearance of the parties. There will be no order as to costs. **P.BHAVADASAN JUDGE** smp