High Court of KeralaDivision Bench2011-06-30Appeal partly allowed.

Sudhakaran v. Meenakshy Panikathu and K.J. Shaji

Case / Petition Number:RFA.784/2009

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: Thottathil B. Radhakrishnan
S. S. Satheesachandran
Judgment Date: 2011-06-30
Court Decision / Holding: This appeal is partly allowed. The plaintiff is granted a decree for recovery of Rs.2 lakhs with interest from the date of suit till recovery, from the second defendant and his assets. The parties shall bear their respective costs in the court below and in this appeal.
Final Disposition: Appeal partly allowed.

Parties to the Case

Appellants / Petitioners

Sudhakaran

Respondents

Meenakshy Panikathu
K.J. Shaji

Legal Representation & Advocates

Counsels for Petitioners

• Adv. S. Mohanan

Counsels for Respondents

• Adv. M.V. Thamban
• Adv. R. Reji
• Adv. Thara Thamban
• Adv. B. Bipin

Case Synopsis & Summary

Sudhakaran, the plaintiff, filed a suit for recovery of money against the second defendant, alleged to have induced him for his nephew’s employment through the SNDP trust. He claimed to have paid Rs 2 lakhs on 21.9.2001 (Ext. A1) and a further Rs 1 lakh on 27.5.2002 (Ext. A2), based on the assurance that employment would be arranged for the plaintiff’s nephew. The suit sought repayment with interest, on the basis of two entrustments. The defendants denied liability, claiming the money was paid to the office bearers of the SNDP trust after introduction by the second defendant and that the trust alone pledged to arrange employment; they argued coercion and threats with blank papers were used to extract signatures. The trial court held that the transactions resembled bribery and that Section 23 of the Indian Contract Act voided such a contract, dismissing the suit. On appeal, the High Court noted that the plaintiff was not seeking enforcement of any particular contract, nor a derivative relief from a contract; Section 23 did not automatically render a mere entrustment of money void if the transaction lacks enforceability. After evaluating the evidence, it found the first transaction the more credible portion. PW2’s testimony regarding the second transaction was unreliable, and Ext. A3 did not prove the second entrustment. Consequently, the appeal was partly allowed, decreeing Rs 2 lakhs with interest from suit date, with costs.

Provisions of Law Cited

Section 23 of the Indian Contract Act, 1872

Legal Doctrines & Maxims

Public policy doctrine under Section 23 of the Indian Contract Act
Preponderance of probabilities (standard of proof)
Entrustment of money as a form of transaction
Unjust enrichment principle
Pleadings must specify material particulars (Bishundeo Narain doctrine)

Submissions & Arguments

Contentions of Appellants / Petitioners

Learned counsel for the appellant submitted that Ext. A3 reveals inherent incongruity in the defence and that the materials on record should be treated as legal evidence on a preponderance of probabilities. He contended that the court below erred in applying Section 23 of the Indian Contract Act to a case grounded not in enforcement of a contract but in the entrustment of money. The appellant asserted that the recourse should be to examine the entrustment of Rs.2 lakhs (the first transaction) and the credibility of PW1 and PW3’s testimonies, and not to strike down the claim altogether on public-policy grounds. Exts. A1 and A2 establish the two entrustments; while Ext A3 offered by the mother of the second defendant indicates admissions that mitigate the defence. The counsel argued that the first transaction, supported by the plaintiff’s testimony and the defendant’s own admission that he caused Ext. A3, demonstrates the plaintiff’s entitlement to relief on the basis of preponderance of probabilities. The lack of credible corroboration for the second transaction should not negate the suit for the legally recoverable amount of Rs.2 lakhs with interest from the date of suit. The application of Section 23 in this context is misconceived and inconsistent with the pleaded case.

Contentions of Respondents

The respondents’ counsel contended that the plaint claim rests on a bare assertion of introduction by the second defendant to SNDP office bearers, and that the alleged payments were made to the office bearers, not to the second defendant. They argued PW1’s version is inconsistent with the pleadings as to residence and the alleged transaction, and that PW2 and PW3’s testimony is neither credible nor corroborative of the second transaction. They maintained that Ext. A3 was obtained under duress, and the first defendant took a stand through Ext. A3 as if executed by herself, a fact admitted by DW1, which undermines the credibility of the claim. The respondents argued that the trial court’s reasoning that the entire claim stands on a transaction equivalent to bribery is not legally correct; the court should not imply a public-policy voidness to bar a genuine claim of debt arising from a misrepresentation or coercion that the evidence fails to robustly prove. The defence urged that the court below’s order be sustained and the appeal be dismissed.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Bishundeo Narain & Another v. Seogeni Rai & Others	AIR 1951 SC 280	Positive	Cited as supportive authority to uphold the principle that, in the absence of material pleadings detailing coercion, evidence cannot be probed; reinforces the need for pleadings and limits on evidentiary scope.

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Extracted Judgment Text

Exact text extracted from official judgment records.

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE THOTTATHIL B.RADHAKRISHNAN & THE HONOURABLE MR. JUSTICE S.S.SATHEESACHANDRAN THURSDAY, THE 30TH JUNE 2011 / 9TH ASHADHA 1933 RFA.No. 784 of 2009() --------------------OS.65/2003 of SUB COURT, MAVELIKKARA .................... APPELLANT/PLAINTIFF: ----------------------------- SUDHAKARAN, AGED 56 YEARS, S/O.KUNJU PILLAI, VAYALIL VEEDU, KANDALLOOR SOUTH MURI, KANDALLOOR VILLAGE. BY ADV. SRI.S.MOHANAN ## RESPONDENT(S)/DEFENDANTS: ---------------------------------- 1. MEENAKSHY ,PANIKATHU, W/O. KARUNAKARAN, OTTATHENGIL VEEDU ARATTUPUZHA MURI, ARATTUPUZHA VILLAGE NOW RESIDING AT THAYILTHERIL (SREE KOVIL) PERINGALA MURI KAYAMKULAM. (Died) 2. K.J.SHAJI, S/O.KARUNAKARAN, OTTATHENGIL VEEDU, ARATTUPUZHA MURI, ARATTUPUZHA VILLAGE NOW RESIDING AT THAYILTHERIL (SREE KOVIL) PERINGALA MURI KAYAMKULAM. R2 BY ADV. SRI.M.V.THAMBAN SRI.R.REJI SMT.THARA THAMBAN SRI.B.BIPIN THIS REGULAR FIRST APPEAL HAVING BEEN FINALLY HEARD ON 30/06/2011, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ## **THOTTATHIL B.RADHAKRISHNAN & S.S.SATHEESACHANDRAN, JJ.** ----------------------------------- ## R.F.A.No.784 OF 2009 -----------------------------------Dated this the 30[th] day of June, 2011 ## **JUDGMENT** ## Thottathil B.Radhakrishnan,J. - 1.The plaintiff in a suit for recovery of money is the appellant. The second defendant is the son of the first defendant. Even going by the written statement, he is a popular political, social and communal leader in the locality, having connections with the office bearers of SNDP trust. - 2.The plaintiff's allegation is that on the assurance that a job would be arranged for his nephew, the second defendant took an amount of Rs.2 lakhs on 21.9.2001 and a further amount of Rs.1 lakh on 27.5.2002 from him. Exts.A1 and A2 were executed; Ext.A1 by the second defendant and Ext.A2 by him and his mother, the first defendant. On the strength RFA.784/09 2 of these documents, the suit was laid for recovery of the aforesaid sum of Rs.3 lakhs, with interest. 3.The defendants filed a joint written statement. Standing by the plaintiff's plea about their social status, they contended that the plaintiff who was in search of a job for his nephew approached the second defendant to introduce him and his nephew to the office bearers of SN trust; that the second defendant did so; that thereafter, the plaintiff and his nephew had some negotiations with the office bearers of that trust without the knowledge of the second defendant and under the assurance of getting employment at one of the institutions under the trust, gave some amounts to them; that his limited role was only to introduce the plaintiff and his nephew to some of the office bearers of the trust; that though the office bearers of the trust had accepted the money from the plaintiff, they did not keep up their word of arranging employment for the plaintiff's nephew; that afterwards the plaintiff and his nephew approached the RFA.784/09 3 second defendant and insisted that he pays back the amounts which they had given to the office bearers of the trust. On this premise, the second defendant denied any liability to pay the amount. The defendants denied having received any amount. They also plead that “on one day” the plaintiff and some others, including his sister, went over to the residence of the defendants and threatened them with deadly weapons and under such coercion, the defendants were made to sign certain blank papers, including stamp papers, and the suit is laid misusing those materials. 4.Plaintiff tendered evidence as PW1. PW3 was examined to corroborate the plaintiff's case as regards the payment of Rs.2 lakhs on 21.9.2001. PW2 was examined to prove the payment of Rs.1 lakh on 27.5.2002. Ext.A3 is a notice issued on behalf of the first defendant through an advocate. That was produced and relied upon by the plaintiff as one issued to him. In that notice, the first defendant alone had taken the stand that the document issued by her was the result of RFA.784/09 4 duress and coercion. However, the second defendant did not have any such case when Ext.A3 was issued on behalf of his mother. During trial, the second defendant, as DW1, candidly admitted that it was he who caused issuance of Ext.A3 as if it is on behalf of his mother. - 5.The court below was of the view that the transactions essentially reflect an arrangement in the nature of bribery and the contract between the parties is void and hence, recourse for recovery of money paid under that is impermissible. Section 23 of the Contract Act was relied on by the court below. It also did not find it prudent to rely on the testimonies of PWs.1 to 3. Resultantly, the plaintiff was non-suited. Hence this appeal. - 6.Learned counsel for the appellant-plaintiff argued that Ext.A3 discloses the inherent incongruity in the defence version and demolishes the pleadings in the written statement. He further argued that the materials on record RFA.784/09 5 ought to have been acted upon as legal evidence, on a preponderance of probabilities, justifies the plaintiff’s entitlement to a decree as prayed for. He assailed the view of the court below on the basis of Section 23 of the Contract Act. 7.Per contra, learned counsel for the surviving second defendant, who is the second respondent, argued that the plaint claim is footed on the foundation that the plaintiff and the second defendant are well known to each other and that what is averred in paragraph 1 of the plaint has been contradicted by the testimony of PW1 who says that he was residing far away. He also argued that the evidentiary value of PWs.2 and 3 is so bleak that it cannot be read with credibility to corroborate the testimony of PW1 regarding the suit transaction. He, accordingly, argued that the impugned decree and judgment do not warrant interference. RFA.784/09 6 8.At the outset, we may point out that the plaintiff is not seeking enforcement of any particular contract. Nor is the suit one seeking relief as a derivative of a contract which he projects. Therefore, examination as to whether that agreement is void and whether that contract is voidable do not arise. Section 23 of the Contract Act which refers to public policy and enjoins that such transaction should fail, cannot be applied in a case where the transaction which is made the foundation of the cause of action for the suit is one of entrustment of money. The object of such entrustment of money may result in the avoidance of the contract. But that does not necessarily mean that if the defendants had obtained the money as alleged by the plaintiff, they could stand unjustly enriched under a transaction which is void. Therefore, the view of the court below that the suit is hit by Section 23 of the Contract Act does not stand. - 9.On to the appreciation of pleadings and evidence, the plaintiff had pleaded two different entrustments. One is that RFA.784/09 7 the amount of Rs.2 lakhs was paid to the second defendant on 21.9.2001. We will hereafter call it as the first transaction. The second, which we will hereafter call as the second transaction, was entrustment of Rs.1 lakh on 27.5.2002. In support of the entrustments, the plaintiff has given oral evidence. His oral evidence in the form of a proof affidavit has been tested on the touchstone of cross examination. He supported his case of having obtained Exts.A1 and A2. A1 is shown to be a receipt of the second defendant having obtained Rs.2 lakhs. That relates to the first transaction. A2 is sought to be proved in relation to Rs.1 lakh. This transaction can be treated to have been impeached by the first defendant even before suit by the issuance of A3. If that were so, we would look for credible legal evidence in corroboration of the plaintiff’s version of that transaction. In this context, we find that the version of PW2, who speaks about the second transaction, is extremely shocking. His testimony, by itself, is not one that inspires confidence, as rightly noticed by the court below. Even if RFA.784/09 8 the second defendant was instrumental in having issued A3 through an advocate, the material evidence on record does not prove the second transaction of entrustment of Rs.1 lakh. In so far as the first transaction is concerned, evidence of PW3 need not be gone into. The testimony of PW1 corroborated by the fact that the second defendant admits of being in a situation of facing more than five litigations of similar nature, all of which have been defeated by him raising similar grounds of defence, the claim of the plaintiff regarding coercion stands substantially proved on the basis of the preponderance of probabilities. Seeking corroboration from PW3 as regards the second transaction would not be of much help for the plaintiff because PW3’s version is that A2 was executed from the house of the defendant and money was entrusted from there. This is contrary even to the plaintiff’s pleading, including in the description of cause of action, which is sought to be made out, as if the transaction took place in the plaintiff’s residence. RFA.784/09 9 - 10.In so far as the pleading of coercion as an element which deprives free consent to the contract in question is concerned, we find that the written statement does not contain any material particular regarding the date and time of the alleged acts or omissions which amount to coercion in terms of the Contract Act. We stand fortified by the decision of the Apex Court in **Bishundeo Narain & Another** v. **Seogeni Rai & Others** [AIR 1951 SC 280] to the effect that bereft of any pleadings regarding the material particulars, no evidence could be looked into on that aspect. 11. In the result, - (i) This appeal is allowed partly. - (ii) The plaintiff is granted a decree for recovery of Rs.2 lakhs with interest from the date of suit till recovery, from the second defendant and his assets. RFA.784/09 10 (iii) The parties shall bear their respective costs in the court below and in this appeal. Sd/THOTTATHIL B.RADHAKRISHNAN, Judge. Sd/S.S.SATHEESACHANDRAN, Judge. kkb.8/7.