M.C. SAINUDDEEN v. AMANMAL JAIN and K.P. MOHANAN

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** # **PRESENT** **THE HONOURABLE MR.JUSTICE K. BABU** **MONDAY, THE 21[ST] DAY OF FEBRUARY 2022 / 2ND PHALGUNA, 1943** **RSA NO. 985 OF 2005** **AGAINST THE JUDGMENT & DECREE IN AS 69/2001 OF ADDITIONAL SUB** ## **COURT, KOZHIKODE** **OS 599/1997 OF PRINCIPAL MUNSIFF'S COURT KOZHIKODE-I** ## **APPELLANT/1ST APPELLANT IN L.A.C/1ST DEFENDANT:** M.C.SAINUDDEEN, AGED 51 YEARS, KATTAYATT PARAMBATH, P.O.CHELAVOOR, KOZHIKODE. BY ADV SRI.AVM.SALAHUDIN ## **RESPONDENTS/RESPONDENT AND 2ND APPELLANT IN LAC/PLAINTIFF AND 2ND** ## **DEFENDANT:** 1 AMANMAL JAIN, AGED 49 YEARS, PROPRIETOR, P.K.INVESTMENT NO.18, ERULAPPAN STREET, 1ST FLOOR, SOWCARPETT, MADRAS-79. 2 K.P.MOHANAN, SO.ASOKAN AGED 52 YEARS, KATTAYATT PARAMBATH, P.O.CHELAVOOR, CHELAVOOR AMSOM AND DESOM, KOZHIKODE TALUK. THIS REGULAR SECOND APPEAL HAVING BEEN FINALLY HEARD ON 21.02.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: R.S.A No.985 of 2005 2 K.BABU, J . -------------------------------------R.S.A No.985 of 2005 --------------------------------------Dated this the 21[st] day of February, 2022 ## JUDGMENT Defendant No.1 in O.S.No.599/1997 on the file of the Munsiff's Court (II), Kozhikode is the appellant. The plaintiff is respondent No.1. Defendant No.2 is respondent No.2. 2. Material facts relevant for the adjudication of this appeal are briefly narrated below: 2.1. The plaintiff is a Financier who advances loans to vehicle owners. On 27.05.1994, defendant No.1 entered into an agreement with the plaintiff and borrowed a sum of Rs.35,000/-. Defendant No.2 was a guarantor of the transaction. At the time of the transaction, the parties executed Ext.A3 agreement. As per the terms of the agreement, defendant No.1 was liable to pay an amount of Rs.53,500/- in 25 monthly instalments. This amount had to be paid in 10 instalments of Rs.2500/- and 15 instalments of Rs.1,900/-. Defendant No.1 was also liable to pay interest @ 36% per annum on default in payment of the instalments. R.S.A No.985 of 2005 3 3. The plaintiff instituted the Original Suit alleging that defendant No.1 failed to pay the instalments on the different due dates. He made belated payments in 13 instalments. As on 27.06.1996, an amount of Rs.31,855.50/- was due from the defendants. 4. The defendants resisted the claim of the plaintiff, contending that defendant No.1 had not borrowed any money from the plaintiff based on the alleged hire purchase agreement. Defendant No.1 approached the plaintiff for a loan of Rs.35,000/-. The plaintiff had agreed to give the amount on payment of interest @ 18% per annum. Based on the promise made by the plaintiff, the defendants had signed three blank stamp papers. Several other blank papers and forms were also entrusted to the plaintiff. The registration certificate of the vehicle was also entrusted to the plaintiff, but, the same was returned later. The plaintiff gave only an amount of Rs.34,212/- to defendant No.1. The hire purchase agreement produced by the plaintiff is the one concocted by him. Defendant No.1 had paid an amount of Rs.31,000/- to the plaintiff. When the plaintiff made an attempt to seize the vehicle forcefully, R.S.A No.985 of 2005 4 defendant No.1 filed O.S.No.370/1996 and obtained an order of temporary injunction. There was no hire purchase agreement between the plaintiff and defendant No.1. The defendants never agreed to pay interest @ 36% per annum as pleaded. 5. The parties went to trial. PWs 1 and 2 were examined and Exts.A1 to A4 were marked on the side of the plaintiff. DW1 was examined and Ext.B1 was marked on the side of the defendants. 6. The Trial Court, as per judgment dated 15.09.1998, partly decreed the suit allowing the plaintiff to realise an amount of Rs.1,600/- with interest @ 18% per annum from 29.09.1995 till the date of realisation with proportionate costs from the defendants and their assets. 7. The plaintiff challenged the decree and judgment dated 15.09.1998 passed by the Trial Court, filing A.S.No.286/1998 before the District Court, Kozhikode. 8. The First Appellate Court held that Ext.A3 could not be styled as hire purchase agreement as envisaged under the HirePurchase Act, 1972. The First Appellate Court, as per judgment dated 14.12.1999, set aside the decree and judgment passed by the R.S.A No.985 of 2005 5 Trial Court on 15.09.1998 and remanded the matter for the limited purpose of recording a finding as to the amount due to the plaintiff under Ext.A3 agreement. 9. The Trial Court considered the matter in the light of the directions issued by the First Appellate Court in the judgment and decree dated 14.12.1999 in A.S.No.286/1998. The Trial Court, as per the judgment dated 27.05.2000, decreed the suit directing the defendants to pay Rs.20,100/- together with 36% interest for the said amount from 29.09.1995 till realisation with costs within three months from the date of the decree. The defendants challenged the judgment and decree of the Trial Court dated 27.05.2000 in A.S.No.69/2001. The First Appellate Court confirmed the findings of the Trial Court. 10. Defendant No.1 is in appeal under Sec.100 of the CPC before this Court. After hearing the learned counsel for the appellant, this Court reformulated the substantial questions of law as follows: (i) Were the Courts below justified in adopting the terms and conditions contained in Ext.A3 while R.S.A No.985 of 2005 6 arriving at a conclusion regarding the amount due to the plaintiff, when there is a specific finding that Ext.A3 is not a hire purchase agreement as provided in the Hire-Purchase Act, 1972? (ii) Whether the plaintiff is entitled to interest @ 36% per annum as decreed by the Courts below. 11. Heard Sri.A.V.M.Salahuddeen, the learned counsel appearing for the appellant/defendant No.1. 12. The learned counsel for the appellant strenuously contended that the Trial Court failed to understand the spirit of the directions of the First Appellate Court in its judgment and decree dated 14.12.1999 while arriving at the amounts due to the plaintiff. The learned counsel further contended that the Trial Court wrongly arrived at a conclusion regarding the amount due to the plaintiff, ignoring the fact that the First Appellate Court had recorded the finding that Ext.A3 cannot be treated as a hire purchase agreement as provided under the Hire-Purchase Act, 1972. According to the learned counsel, the First Appellate Court blindly accepted the findings of the Trial Court without even re-appreciating the pleadings and evidence. The learned counsel further contended R.S.A No.985 of 2005 7 that there had not been any effectual adjudication of the lis in the Courts below as far as the claim of the plaintiff is concerned. 13. The fact that on 27.05.1994, defendant No.1 had borrowed a sum of Rs.35,000/- from the plaintiff is not in dispute. Defendant No.1 further admitted that he had agreed to pay interest @ 18% per annum. 14. The First Appellate Court, in its judgment dated 14.12.1999, specifically held that Ext.A3 cannot be treated as a hire purchase agreement as envisaged under the Hire-Purchase Act, 1972. The remand order dated 14.12.1999 reads thus: “In the result, this appeal is allowed. The decree and judgment passed by the Court below refusing to grant a decree in respect of the balance portion of the amount claimed in the plaint are set aside. The case is remanded for the limited purpose of considering the amount due to the appellant under Ext.A3 agreement. The parties are directed to appear before the lower court on 27.01.2000. The parties are also directed to suffer their respective costs in the appeal.” 15. The original suit was remitted to the Trial Court specifically for the purpose of considering the amount due to the plaintiff, after holding that Ext.A3 cannot be styled as a hire purchase agreement. The Trial Court reconsidered the claims of the plaintiff on the premise that Ext.A3 is a hire purchase R.S.A No.985 of 2005 8 agreement. In paragraph 8 of the judgment, the Trial Court recorded that as per Ext.A3 the defendants are liable to pay Rs.53,500/- as per the hire purchase agreement, which includes hire purchase charges also. The Trial Court also held that the plaintiff is entitled to get 36% interest for the defaulted amount. Thereby, the Trial Court entered into a finding that the plaintiff is entitled to get a sum of Rs.20,100 with 36% interest from 29.09.1995. 16. The First Appellate Court, in its judgment dated 04.02.2005, after holding that the transaction entered into between the defendants and the plaintiff is only a loan transaction and not a hire purchase transaction, confirmed the decree and judgment of the Trial Court, allowing the plaintiff to realise Rs.20,100 with 36% interest. After having held that Ext.A3 is not a hire purchase agreement, the Trial Court as well as the First Appellate Court granted Rs.18,500/-towards hire purchase charges. Since the transaction is only a loan transaction, the plaintiff is not entitled to realise the interest @ 36% per annum. 17. This Court is of the view that the Courts below were wrong in adopting the entire terms and conditions contained in R.S.A No.985 of 2005 9 Ext.A3 document after having found that it was not a hire purchase agreement as provided under the Hire-Purchase Act, 1972. 18. The First Appellate Court has failed to discharge its duties in appreciating the pleadings and evidence for arriving at a finding on the amount due to the plaintiff from the defendants. The judgment of the First Appellate Court does not reflect the conscious application of mind and its findings are not supported by reasons. In Santosh Hazari v. Purushottam Tiwari [(2001) 3 SCC 179], the Apex Court held that first appeal is a valuable right of the parties and unless restricted by law, the whole case is therein open for rehearing both on questions of fact and law. Therefore, the judgment of the First Appellate Court must reflect its conscious application of mind and record findings supported by reasons on all the issues arising along with the contentions put forth and pressed by the parties for the decision of the appellate court. 19. In the case on hand, the First Appellate Court has failed to exercise its responsibilities in re-appreciating the pleadings and evidence and arriving at conclusions on facts. This Court is of the view that there had been no effectual adjudication of the lis in the R.S.A No.985 of 2005 10 First Appellate Court. 20. Therefore, the matter is liable to be remanded to the First Appellate Court. This Court is of the view that remand is caused not due to the fault of the appellant. 21. In the result, the Regular Second Appeal is allowed by way of remand. The judgment dated 04.02.2005 of the First Appellate Court is set aside. The matter is remanded to the First Appellate Court for the limited purpose of considering the amount due to the plaintiff from the defendants, taking into account the fact that Ext.A3 is not a hire purchase agreement as envisaged under the Hire-Purchase Act, 1972. 22. The court fee remitted by the appellant is ordered to be refunded to him as provided in Section 67 of the Kerala Court-Fees and Suits Valuation Act, 1959. The parties are directed to appear before the First Appellate Court on 23.05.2022. The Regular Second Appeal is allowed as above. Sd/- K.BABU, JUDGE KAS