Vijayagopal M. v BRD Finance Limited

``` IN THE HIGH COURT OF KERALA AT ERNAKULAM ``` ## `PRESENT` ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` TUESDAY, THE 8[TH] DAY OF NOVEMBER 2022 / 17TH KARTHIKA, 1944 ``` ## `OP(C) NO. 228 OF 2022` ``` AGAINST THE ORDER DATED 11.11.2021 IN IA 1932/2019 IN OS 36/2019 OF SUB COURT, CHAVAKKAD ``` ## `PETITIONER:` ``` VIJAYAGOPAL .M, AGED 65 YEARS, S/O. G.G. MENON, 'ASWATHY', NEAR VAIDYUTHA BHAVAN, KOTTAPPURAM ROAD, THRISSUR, PIN 680 584. ``` ``` BY ADV R.RAMADAS ``` ## `RESPONDENT:` ``` BRD FINANCE LIMITED, BETHANY COMPLEX, THRISSUR ROAD, KUNNAMKULAM, REPRESENTED BY ITS LITIGATION CLERK MANI S, AGED 55 YEARS, S/O. SANKARAN, MULANGUNNATHUKAVU HOUSE, KONCHERY ROAD, MULAMKUNNATHUKAVU P.O, KILLANOOR VILLAGE, THRISSUR 680 581. ``` ``` BY ADVS.SANTHOSH P.PODUVAL R.RAJITHA CHITHRA S.BABU R.N.SANDEEP ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 08.11.2022, ALONG WITH OP(C).2028/2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:2:- ``` ## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ``` THE HONOURABLE MR.JUSTICE C.S.DIAS ``` ``` TUESDAY, THE 8[TH] DAY OF NOVEMBER 2022 / 17TH KARTHIKA, 1944 ``` ## `OP(C) NO. 2028 OF 2022` ``` AGAINST THE ORDER DATED 17.08.2022 IN IA. NOS.7 and 8/2022 OF SUB COURT, CHAVAKKAD ``` ## `PETITIONER/ RESPONDENT/ PETITIONER/ DEFENDANT:` ``` VIJAYAGOPAL M AGED 62 YEARS S/O. G.G. MENON, 'ASWATHY', NEAR VAIDYUTHA BHAVAN, KOTTAPPURAM ROAD, THRISSUR, PIN – 680584 ``` ``` BY ADV R.RAMADAS ``` ## `RESPONDENT/PETITIONER/ RESPONDENT/ PLAINTIFF:` ``` BRD FINANCE LIMITED, AGED 55 YEARS, BETHANY COMPLEX, THRISSUR ROAD, KUNNAMKULAM, REPRESENTED BY ITS LITIGATION CLERK MANI S, S/O. SANKARAN, MULANGUNNATHUKAVU HOUSE, KONCHERY ROAD, MULAMKUNNATHUKAVU P.O., KILLANOOR VILLAGE, THRISSUR - 680 581. ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 08.11.2022, ALONG WITH OP(C).228/2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:3:- ``` Dated this the 8[th] day of November,2022 ## **C O M M O N J U D G M E N T** As the parties are the same and the impugned orders challenged in the original petitions passed in O.S.No.36/2019 of the Court of the Subordinate Judge, Chavakkad(court below), the original petitions are being disposed of by this common judgment. 2. O.P.(C)No.228/2022 is filed challenging Ext.P5 order passed in I.A.No.1932/2019 and O.P. (C)No.2028/2022 is filed challenging Exts P15 and P16 orders passed in I.A.Nos.7 & 8/2022 in the suit. 3. The common case of the petitioner, in the original petitions, is: he is the defendant in the suit filed by the respondent, for recovery of an amount of Rs.60,00,000/-. The respondent has produced a fabricated promissory note. The petitioner has filed a detailed written statement, denying the allegations in the plaint. Along with the plaint, the petitioner had ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:4:- ``` filed I.A.No.1932/2019, to decide the maintainability of the suit on a preliminary issue. The same was opposed by the respondent. The court below, without considering the application in its proper perspective, dismissed the above application by Ext.P5 order. Thereafter, the respondent filed I.A.No.7/2022, to send the fabricated promissory note along with the specimen, standard signature and other documents containing signatures of the petitioner for expert opinion. Even though the same was objected to by the petitioner, the court below, by the impugned Ext.P15 order, allowed the application. Similarly, the petitioner had filed I.A.No.8/2022, seeking leave to amend the written statement. The court below, by the impugned Ext.P16 order, rejected the application for amendment. Ext.P5 order in O.P.(C)No.228/2022 and Exts.P15 and P16 orders in O.P.(C)No.2028/2022, are erroneous, illegal and improper. Hence, the original ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:5:- ``` petitions. 4. Heard; Sri.R.Ramadas, the learned counsel appearing for the petitioner and Sri.Santhosh P. Poduval, the learned counsel appearing for the respondent. 5. The points that emanate for consideration in the original petitions are: (i) whether there is any illegality in Exts.P5 order; - (ii) whether there is any illegality in Ext.P15 order; and (iii) whether there is any illegality in Ext.P16 order. ## **Point No.(i):** 6. The respondent has filed the suit for recovery of an amount of Rs.60,00,000/- with interest on the strength of a demand promissory note. The petitioner has filed his written statement and I.A.No.1932/2019, to decide the maintainability of the suit on a preliminary issue. ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:6:- ``` 7. In the affidavit in support of the application, the petitioner has inter alia, contended that the respondent is a chit company and its business is conducting chitty transactions as provided under Section 12 of the Chit Funds Act, 1982( in short, ‘Act’). Therefore, the respondent cannot lend money. The alleged transaction in the plaint i.e., the lending of Rs.60,00,000/- to the petitioner is prohibited in law. Hence, the suit is to be rejected. 8. The application was objected to by the respondent, inter alia, contending that the allegation that the chitty business is only governed by Section 12 of the Act is not correct. Chit fund companies are permitted do other business, including money lending business under the provisions of the Kerala Money Lenders Act,1958 or on any other licence. The suit cannot be decided on a preliminary issue as contended by the petitioner. ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:7:- ``` ## 9. The court below, after analysing the rival pleadings, by the impugned Ext.P5 order held as follows: “11. The gist of the decision in Balakrishnan v. Babu (1994 KHC 195) that if a person having no license under the Money Lenders Act advances loan, the transaction is not opposed to public policy and not hit by Sec. 23 the Indian Contract Act applies to the facts of this case. The gist of the decision in Aravindakshan N. and Another v. M/s. Olympic Credit Corporation is that if a on does money lending business without a license under the Money Lenders 1958 (Kerala) it would only attract penal consequences under the Act. In Sundaran Finance Ltd. v. State of Kerala and Others (2009 (4) KHC 871), it was held that provisions of IIIB of Reserve Bank of India Act are intended to protect the depositors whereas the provisions of the Money Lender's Act are essential to protect the borrowers. In these case, the plaintiff does not have a case that the respondent is a depositor with the plaintiff company. Further the absence of registration under Sec. 45(1) (A) of the Reserve Bank of India Act only attract Penal Consequence contemplated under Sec. 58(B) (4A)of Reserve Bank of India Act. 12. Therefore on going by the said decisions of the Hon'ble High Court it can be inferred that if a Company conducts money leading business without registration under Sec. 45(1)(A) of the Reserve Bank of India Act, leading of money cannot be said to be illegal and opposed ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:8:- ``` to public policy as per Sec. 23 of the Contract Act. So the transaction stated by the defendant cannot be said to be barred by any law in order to reject the plaint. Point is found against the petitions.” 10. Order 7 Rule 11 of the Code of Civil Procedure,1908(in short,‘ Code’) provides the manner in which a plaint can be rejected. 11. On a reading of the assertions in the application filed by the petitioner, it is his case that the suit is barred by law, falling within the purview of Clause (d) of Rule 11 of Order VII of the Code. 12. The petitioner contends that the suit is not maintainable, as the respondent is doing chit funds business but is lending money. The respondent, on the other hand, contends that they have permitted to lend money as per the provisions of the Kerala Money Lenders Act. 13. Going by the rival pleadings and contentions, I am of the definite view that the suit cannot be ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:9:- ``` rejected under Order 7 Rule 11 of the Code, but the issues can only be decided after a full-fledged trial. Thus, I do not find any error in Ext.P5 order passed by the court below. ## **Point No.(ii)** 14. The specific case of the petitioner in his written statement is that the promissory note itself is totally fabricated. 15. In the above background, the respondent filed I.A.No.7/2022, to send the document for expert opinion. The same was objected to by the petitioner contending that there is no necessity to send the same, instead, the court below would invoke Sections 45, 47 and 73 of the Indian Evidence Act, 1872 and compare the documents. 16. In the case at hand, it is the specific contention of the petitioner that the document is a fabricated one. ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:10:- ``` 17. In the above situation, I am of the firm view that the court below does not have expertise to form an opinion as to whether the document is forged and fabricated. Therefore, the proper course would be to send the disputed document for the opinion of the expert. Thus, I do not find any error in Ext.P15 order passed by the court below, referring the document for expert opinion, which would do complete justice and would aid the court to effectively decide the suit. Hence, I confirm Ext.P15 order. ## **Point No.(iii)** 18. The petitioner had filed I.A.No.8/2022, seeking leave to amend the written statement, to augment pleadings already on record in the written statement. The same was not objected to by the respondent. Nonetheless, the court below, by the impugned Ext.P16 order, rejected the application on the ground that it has already taken a decision in ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:11:- ``` I.A.No.1932/2019, which led to Ext.P5 order. 19. It is trite, that applications for amendment have to be liberally considered. The trial in the suit has not commenced and the suit is only at its nascent stage. I do not find any reason to decline the application seeking leave to amend the written statement. Thus, I am of the view that the application seeking leave to amend the written statement is only to be allowed. Hence, I set aside Ext.P16 order. In the result, the original petitions are disposed of as follows: - (i) O.P.(C)No.228/2022 is dismissed. - (ii) Ext.P15 order in O.P.(C)No.2028/2022 is confirmed. - (iii)Ext.P16 order in O.P.(C)No.2028/2022 is set aside. - (iv) I.A.No.8/2022 is allowed. - (v) The petitioner is granted leave to amend the written statement, in accordance with law, ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:12:- ``` within the time period prescribed under the Code. - (vi)The petitioner shall file his amended written statement in the suit. The respondent would be at liberty to file his rejoinder to the amended written statement. - (vii)The court below shall consider and dispose of the suit, as observed above. Sd/- ## **C.S.DIAS,JUDGE** DST/08.11.22 //True copy/ P.A.To Judge ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:13:- ``` ## `APPENDIX OF OP(C) 228/2022` ``` PETITIONER EXHIBITS ``` - `EXHIBIT P1` - `TRUE COPY OF THE PLAINT DATED 23.02.2019 IN O.S. NO. 36/2019 ON THE FILE OF SUB COURT, CHAVAKKAD.` - `EXHIBIT P2 TRUE COPY OF THE WRITTEN STATEMENT DATED 10.06.2019 FILED BY THE PETITIONER IN O.S. NO. 36/2019 ON THE FILE OF SUB COURT, CHAVAKKAD.` - `EXHIBIT P3 TRUE COPY OF THE APPLICATION I.A. NO. 1932/2019 IN O.S. NO. 36/2019 ON THE FILE OF SUB COURT, CHAVAKKAD DAT` - `ED 19.12.2019 FILED BY THE PETITIONER.` - `EXHIBIT P4 TRUE COPY OF THE COUNTER FILED BY THE RESPONDENT HEREIN IN I.A. NO. 1932/2019 IN O.S. NO. 36/2019, SUB COURT, CHAVAKKAD, DATED 30.01.2020.` - `EXHIBIT P5 TRUE COPY OF THE ORDER DATED 11.11.2021 IN I.A. NO. 1932/2019 IN O.S.NO. 36/2019 ISSUED BY THE COURT BELOW.` - `EXHIBIT P6 TRUE COPY OF THE RELEVANT PAGES OF INCOME TAX RETURNS FILED BY THE PETITIONER FOR THE PERIOD 2017-2018.` - `EXHIBIT P7 TRUE COPY OF THE RELEVANT PAGES OF INCOME TAX RETURNS FILED BY THE PETITIONER FOR THE PERIOD 2018-2019` - `EXHIBIT P8 TRUE COPY OF THE RELEVANT PAGES OF THE INCOME TAX RETURNS SUBMITTED BY THE PETITIONER'S WIFE P. RADHIKA MENON FOR THE PERIOD 2017-2018.` - `EXHIBIT P9 TRUE COPY OF THE RELEVANT PAGES OF THE INCOME TAX RETURNS SUBMITTED BY THE PETITIONER'S DAUGHTER YAMUNA VIJAYAGOPAL FOR THE PERIOD 2017-2018.` - `EXHIBIT P10 TRUE COPY OF THE RELEVANT PAGES OF THE ANNUAL REPORT OF THE PLAINTIFF COMPANY FOR` ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:14:- ``` ``` THE PERIOD 2018-2019. ``` - `EXHIBIT P11` ``` TRUE COPY OF THE ORDER DATED 04.11.2019 PASSED BY THE NATIONAL COMPANY LAW TRIBUNAL, KOCHI BENCH IN C.P NO. 113/KOB/2019 FILED BY THE PETITIONER AGAINST THE RESPONDENT. ``` - `EXHIBIT P12 TRUE COPY OF THE ORDER DATED 19.12.2019 IN CP NO. 104/KOB/2019 AND CONNECTED CASES FILED BY THE PETITIONER HEREIN AGAINST THE RESPONDENT HEREIN.` - `EXHIBIT P13 TRUE COPY OF THE BOND CERTIFICATE DATED 17.07.2017 ISSUED BY RURAL ELECTRIFICATION CORPORATION LTD.` - `EXHIBIT P14 TRUE COPY OF THE NEWS ITEM PUBLISHED IN THE HINDU DAILY DATED 11.02.2021.` - `EXHIBIT P15 TRUE COPY OF THE NEWS ITEM PUBLISHED IN MANORAMA ONLINE EDITION DATED 11.02.2021.` - `EXHIBIT P16 TRUE COPY OF THE PROMISSORY NOTE DATED 28.10.2016 PRODUCED BY THE RESPONDENT HEREIN IN THE SUIT O.S. NO. 36/2019 ON THE FILE OF THE SUB COURT, CHAVAKKAD.` ``` RESPNDENT’S EXHIBITS: NIL ``` ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:15:- ``` ## `APPENDIX OF OP(C) 2028/2022` - `PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE PLAINT DATED 23.02,.2019 IN O.S. NO.36/2019, SUB COURT, CHAVAKKAD` - `EXHIBIT P2 TRUE COPY OF THE WRITTEN STATEMENT DATED 10.06.2019 IN THE ABOVE SUIT` - `EXHIBIT P3 TRUE COPY OF RELEVANT PAGES OF INCOME TAX RETURNS FILED BY THE PETITIONER FOR THE PERIOD 2017-2018` - `EXHIBIT P4 TRUE COPY OF THE RELEVANT PAGES OF INCOME TAX RETURNS FILED BY THE PETITIONER FOR THE YEAR 2018-2019` - `EXHIBIT P5 TRUE COPY OF THE RELEVANT PAGES OF INCOME TAX RETURNS SUBMITTED BY PETITIONER'S WIFE P. RADHIKA MENON` - `EXHIBIT P6 TRUE COPY OF RELEVANT PAGES OF INCOME TAX RETURNS SUBMITTED BY PETITIONER'S DAUGHTER YAMUNA VIJAYAGOPAL` - `EXHIBIT P7 TRUE COPY OF THE RELEVANT PAGES OF THE ANNUAL REPORT OF THE PLAINTIFF COMPANY FOR THE PERIOD 2018-2019` - `EXHIBIT P8 TRUE COPY OF THE BOND CERTIFICATE DATED 17.07.2017 ISSUED BY THE RURAL ELECTRIFICATION CORPORATION LTD` - `EXHIBIT P9 TRUE COPY OF THE NEWS ITEM PUBLISHED IN THE HINDU DAILY DATED 11.02.2021` - `EXHIBIT P10 TRUE COPY OF THE NEWS ITEM PUBLISHED IN THE MANORAMA ONLINE EDITION DATED 11.02.2021` - `EXHIBIT P11 TRUE COPY OF HE PROMISSORY NOTE DATED 28.10.2016 IN THE SUIT O.S. NO. 36/2019, SUB COURT, CHAVAKKAD PRODUCED BY THE RESPONDENT` - `EXHIBIT P12 TRUE COPY OF THE I.A. NO.7/2022 IN O.S.` ``` O.P.(C)Nos.228 & 2028/2022 ``` ``` -:16:- ``` ``` NO.36/2019 DATED 13.06.2022 ``` ``` EXHIBIT P13TRUE COPY OF THE OBJECTION DATED 04.08.2022 TO I.A. 7/2022 ``` ``` EXHIBIT P14TRUE COPY OF APPLICATION I.A. NO.8/2022 IN O.S. NO.36/2019 FILED IN JUNE 2022 ``` ``` EXHIBIT P15TRUE COPY OF ORDER DATED 17.08.2022 IN I.A. NO.7/2022 ``` ``` EXHIBIT P16TRUE COPY OF ORDER DATED 17.08.2022 IN I.A. NO.8/2022 ``` ``` RESPONDENT’S EXHIBITS: NIL ```