JUDGMENT
K. Ramamoorthy, J.
(1) The suit is filed for the recovery of Rs.67,68,858.00 with subsequent interest.
(2) In the plaint, apart from staling that plaint is filed under Order 37 Civil Procedure Code, a decree for mortgage is also prayed for. The plaint was presented on 29.3.93. On 30.3.93 37 Order of provisions the per as issued be to directed was summons and Code Procedure Civil under is suit Therefore, J. Bansal, by ordered accepted that a treated may decree mortgage for relief up giving he submitted plaintiff counsel learned Court, before came matter
(3) There are three defendants in the suit. First defendant filed IA.7843/94 for leave to defend. Second defendant filed IA.7533/94 for leave to defend. He also filed IA.7605/94 for condensation of delay for 55 days in filing IA.7533/94. Defendant No. 2 has filed O.A.7/94 questioning the order dated 3.8.94 by the Joint Registrar holding that the summons for judgment had been served on the second defendant on 27.6.94. Second defendant has also filed IA.7747/94 for condoning delay in filing the appeal. Third defendant has filed IA.4760/94 for leave to defend.
(4) The learned counsel for the parties argued the matter very elaborately. Before dealing with the defense of defendants 1 to 3, I shall briefly state the case of the plain- tiff as found in the plaint.
(5) The plaintiff and the first defendant had some acquaintance since the time when the first defendant acted as the property broker for the plaintiff for purchasing the house bearing No. 14, Anand Lok, New Delhi from Dr. Naresh.
(6) In the first week of May 1989, first defendant approached the plaintiff request- ing for accommodation by lending a sum of Rs. 10 lakhs to meet some of his financial obligations in his property business. The first defendant promised to pay interest @ 36% per annum, compoundable on every three months and the first defendant wanted the money to be paid in cheque in the name of first defendant and the third defendant (Ramesh Chander Suri). A cheque for Rs. 7 lakhs dated 4.5.89 was issued in the name of the third defendant and the cheque for Rs. 3 lakhs dated 24.5.89 was issued in the name of the first defendant. It was agreed that the interest would be paid @ 36% per annum with quarterly rest. The fact that the cheques had been encashed by defendants I and 3 and they had used the money, is not disputed. The third defendant had received the money through first defendant is also not in dispute.
(7) In or about the 5th January 1990 first defendant again approached the plaintiff for further loan stating that if plaintiff helped him by giving Rs. 10-lakhs he would be able to finish a profitable deal and the entire money that may fall due to the plaintiff could be paid by him within a short time. The plaintiff again lent money. This time also Rs. 10 lakhs. A cheque dated 5.1.1990 for Rs. 6 lakhs was issued in the name of the first defendant and a cheque dated 5.1.90 in the name of defendant No. 2 (Mr. Roshan Lal) for Rs. 4 lakhs. This amount was also repayable with interest @ 36% per annum with quarterly rest. First defendant represented that the second defendant was his Company) he was one of the directors of the Co. and that he was competent to represent it and he was authorised to operate on behalf of the Company.
(8) On 27th of January 1990 the first defendant came forward with a further request for loan of Rs. 4 lakhs and the cheque was to be issued in the name of 2nd defendant (Rockfield Developers Pvt. Ltd.). A cheque for Rs. 4 lakhs was issued in the name of Rockfield Developers Pvt. Ltd. on 27th of January 1990 and this amount was also repayable with interest @ 36% per annum with quarterly rest. Therefore, in all Rs. 24 lakhs had been taken as loan by defendants 1 to 3 through first defendant. The details are :-
1.4.5.89 Rs. 7 lakhs cheque to defendant No.3.
2.4.5.89 cheque for Rs. 3 lakhs to defendant No.1.
3.5.1.90 cheque for Rs. 6 lakhs to defendant No.1.
4.5.1.90 cheque for Rs. 4 lakhs to defendant No.2.
5.27.1.90 cheque for Rs. 4 lakhs to defendant No.2.
(9) The plaintiff would further state that the defendant first defendant was giving evasive replies when demands were made for payment. On 21st of September 1991 defendant No. I gave in writing acknowledging and confirming that he and defendants 2 and 3 had received Rs. 24 lakhs as loan in the name of defendant No.1, defendant No. 2 and defendant No. 3, that in the event of failure to pay on his part and in the event of failure on their part, the plaintiff would be entitled to bring the properties of the first defendant for sale. First defendant had adjusted a sum of Rs. 50,000.00 in the total sum of Rs. 64 lakhs towards his commission payable by the plaintiff for completing the transaction of the purchase of house No. 14, Anand Lok. Therefore, defendant No. I had acknowledged in that document that a sum of Rs. 23.50 lakhs was due with interest. After repeated demands, defendant No. I gave a cheque for Rs. 7 lakhs towards interest payable. There was a balance of Rs. 10,95,470.00 , payable by defendant No. 1, on account of decree. As on 28.2.93 the amounts payable by the defendants are shown in the plaint as follows ;-
1.Defendant No. 1 Vinod Kumar Gupta – Rs. 10,18,225.00 .
2.Defendant No. 2 Rockfield Developers Pvt. Ltd. – Rs. 4l,42,471.00
3.Defendant No. 3 Ramesh Chand Suri-Rs. 16,08,162.00 .
(10) In his leave to defend petition, first defendant (I.A.7843/94) stated that the suit under Order 37 Civil Procedure Code is not maintainable because the suit does not arise on a bill of exchange, hundi, promissory note or a written contract. A sum of Rs. 7 lakhs was paid by the plaintiff to defendant No. 3 on 4.5.89 as advance for the purchase of land from defendant No. 3. At page 4 in pare E (c) of the petition, it is stated as follows :- “THE defendant No. I in pursuance of the plaintiffs request and interest in buying the agricultural land started making efforts for arranging the sale and in fact was able to materialise the same and negotiated with the defendant No. 3 on behalf of plaintiff and in fact struck the deal for agricultural land belonging to defendant no. 3 at Kishan Garh for a sum of Rs. 60 lakhs with the defendant No. 3 with the consent and authority of the plaintiff. Accordingly, as agreed and decided the deal was concluded for Rs. 60 lakhs and a sum of Rs. 7 lakh was paid to the defendant No. 3 after taking a cheque for the same from the plaintiff on ‘4.5.89 and balance was agreed to be paid within two months of 4.5.89, i.e. latest by 4.7.89 out of which 20% payment was to be completed within 15 days time and rest within 45 days thereafter upon taking clearance in Form 37-1.”
(11) The plaintiff failed to perform his part of the understanding and although third defendant was well within his rights in forfeiting the sum of Rs. 7 lakhs which was returned to the plaintiff. At page 6 of the petition, the defendant No. I states thus :- “HOWEVER,the defendant No. I as a gesture of goodwill approached the defendant No. 3 for returning back the sum of Rs. 7 lacs paid by the plaintiff towards part payment of the earnest money. Although, the defendant No. 3 was at liberty to forfeit the earnest money, yet as a gesture of goodwill the sum of Rs. 7 lacs was paid back by the defendant No. 3 to the plaintiff vide cheque No. 535851 dated 22.1.92 drawn on Punjab National Bank, Greater -Kailash-II, New Delhi, in full and final settlement of the claim of the plaintiff in this regard. It is submitted after having received a sum of Rs. 7 lacs in full and final settlement regarding the said transaction no claim can be raised by the plaintiff in regard thereto.”
THERE is no letter from first defendant and the third defendant to the plaintiff that the sum of Rs. 7 lacs was paid in full and final settlement of the claim of the plaintiff with reference to the sale transaction.
(12) Defendant No. I filed the petition for leave to defend on 25.9.94. Defendant No. 2 filed the petition on 16.5.94 and the third defendant on 25.8.94.
(13) Under normal circumstances these dates cannot be of any moment. But when defendant No. I a centrifugal force would appear to have formulated a scheme in filing the petitions. In the Court also he had attempted to play a game so that he could succeed in getting leave to defend. Third defendant does not claim to have had any direct contact with the plaintiff. As soon as he was served with the summons for judgment, he must have asked the first defendant to make arrangements for engaging a counsel and at the insistence of the first defendant the petition must have been drafted and third defendant had signed the same. The case of the second defendant cannot be different. It would be clear from order dated 3.8.94 by the Joint Registrar. The first defendant had given his address in the Memo of Appearance different from what was given by the plaintiff. Therefore, he managed to get the fresh summons issued to him. Therefore, defendant Nos. 1, 2 and 3 were aware of the case in June 1994 itself because the first defendant was the one for all the defendants adopting a Gilbertian process.
(14) In the light of the above, I would like to notice the defense raised by defendant No. 3 as it were, in his petition IA.4760/94 so that the scheme of the first defendant could be seen to be very transparent.
(15) In IA..4760 at page 3 in paragraphs (d) and (e), the defendant No. 3 stated as under :-
“(D)That the plaintiff is guilty of concealment of material facts and has not Stated the true facts before this Hon’ble Court. In -this regard, it is submitted that defendant No. I had approached the defendant No. 3 on behalf of the plaintiff in May, 1989, that the plaintiff was interested in buying the agricultural land belonging to defendant No. 3 at village Kishan Garh, Tehsil Mehrauli, New Delhi and accordingly after .negotiations, defendant No. 3 became agreeable to sell 30 acres of the said land for a total consideration of Rs. 60 lakhs.
(E)That on account of the said negotiations, defendant No. I gave a cheque of Rs. 7 lakh, which was issued by the plaintiff, to defendant No. 3 which was received as token money for concluding the deal. At the time of payment of Rs. 7 lakh, it was represented by defendant No. I that the balance amount would be paid shortly and agreement would be arrived and thereafter permission will be sought from the competent authority to which defendant No. 3 became agreeable on the conditioner that the payments would be made in time.”
(16) The third defendant admits that he does not know the plaintiff. When such an obligation had been undertaken by him by receiving money he cannot seek to wriggle out by saying that what was received in 1989 had been paid back in January 1992 and, therefore, the plaintiff can not make any claim against him. On the date when petition was drafted i.e. in August 1994 defendant No. 3 must have been aware of the averments in the plaint. When there is a specific plea in the plaint that the first defendant had acknowledged in writing on 21.9.91 the amount payable by all the defendants, there is no denial by the third defendant, It is noteworthy the cheque was issued by the third defendant on 29.2.92, long after the acknowledgment in writing by the first defendant.
(17) It is not the case of the third defendant that first defendant made the acknowledgment without his knowledge and first defendant had tried to over reach him. He has no grievance against first defendant on any account. Therefore, the cheque dated 22.1.92 is stated to have been issued by the third defendant and given by the first defendant to the plaintiff can be only towards interest and not in full and final settlement of the claim of the plaintiff against first defendant and the third defendant. There is nothing in writing from third defendant and the first defendant that the cheque was issued on 22.1.92 in full satisfaction of the claim of the plaintiff.
(18) The plaintiff filed reply to IA.4460/94, filed by the third defendant, on 10.11.94. He has denied all the allegations in the petition. At page 4 in paragraph (b), the plaintiff refers to the acknowledgment in writing by the first defendant on 21.9.91. At page 6 in paragraph (d) refuting the case of the third defendant about the purchase of land the plaintiff states “No details of the alleged lands have been given and nor any other particular of the alleged negotiations or transactions have been given.”
(19) In the rejoinder filed by the third defendant on 8.12.94 at page 4 in paragraph (b), he states that “It is denied that the defendant No. 3 is bound by any alleged writing dated 21.9.91.” This is clearly an after thought.
(20) Before I consider the application for condoning the delay in filing the application for leave to defend by the second defendant, I feel that it is better to notice the case of the second defendant also at this stage. Second defendant filed I.A.7533/94 on 25.8.94. Defendant No. I did not file the petition on behalf of the second defendant. Mr. Pankaj Nakara had signed the petition on behalf of the second defendant. He would propound his theory about the transaction. At page 5 in paragraph (D), it is stated thus:-
“(D)For that the plaint does not state the facts correctly. The correct factual position is as under:
THE defendant No. I, a property agent approached the defendant No. 2 for sale of it’s land situated at Mustatil No. 27 Killa No. 14 situated at village Jonapur, Tehsil Mehrauli, New Delhi. The defendant No. 2 agreed to sell the land for a price of Rs. 2.5 Crores and it was stipulated by and between the defendant No. I and 2 that the purchaser of the property i.e. the plaintiff would pay the earnest money of Rs. 25 lakhs latest by 5.2.90 and thereafter the defendant No. 2 would take steps to obtain clearance under Form 371 of the Indian Income Tax Act after executing regular agreement to sell in respect of the property and the sale deed shall be executed against the payment of balance amount of Rs. 2.25 crores within 30 days of the receipt of the clearance under Form 371 of appropriate authority. It was further agreed that in case the earnest money is not completed by 5.2.90 or if the payment of earnest money of Rs. 25 lacs is completed but thereafter if the sale is not completed within 30 days of clearance from the appropriate authority on account of non payment of sale consideration by the plaintiff then in that eventuality the earnest money if paid in full shall stand forfeited or in the event of plaintiff through defendant no. I fails to complete the earnest money by 5.2.90 then the part of the earnest money paid till then shall stand forfeited.
IT is pertinent to state here that the plaintiff was known to the defendant No. 2 and the defendant No. 2 has never had any direct dealing with the plaintiff. The defendant No. I was the property broker who proposed the transaction and conducted the same for an on behalf of the plaintiff.
ALTHOUGH the plaintiff was required to complete the payment of Rs. 25 lakhs towards earnest money by 5.2.90 under the oral agreement arrived at between the’ plaintiff and the defendant No. 2 through defendant No. I yet the plaintiff failed to complete the said payment of earnest money and paid only a sum of Rs. 14 lakhs to defendant No. 2 through defendant No. 1 in the Installments comprising of Rs. 10 lakhs by means of two cheques on 5.1.90 and Rs. 4 lakhs by cheque dt. 27.1.90 and thus failed to pay the sum of Rs. 11 lakhs being the balance sum payable in respect of the earnest money which was not paid by the plaintiff despite repeated reminders and lapse of time within which the earnest money was liable to be paid and consequently the amount paid stood forfeited on 6.2.90. Thus it is clear that no sum is required to be paid by the defendant No. 2 to the plaintiff as alleged.”
THE stand taken in paragraph (e) at page 7 is interesting. Second defendant states that it also did not have any contact with the plaintiff having received Rs. 14 lakhs. The para runs as follows:- “(E)For that the defendant No. 2 has had no direct dealings/links with the plaintiff as alleged. There is no privity of contract between the plaintiff and defendant No. 2 and as such no suit for recovery of any sum arising out of any contract or otherwise is maintainable against the defendant No. 2.”
(21) According to the second defendant the forfeiture of the amount was on 16.2.90 and nothing is produced to show that there was anything in writing from the second defendant to the plaintiff in this regard. It is very significant to notice that the second defendant would not touch on the acknowledgment in writing on 21.9.91 and the claim of the plaintiff that the first defendant is one of the directors in defendant No. 2. On 10.11.94 the plaintiff filed his reply to IA.7533/94, filed by the second defendant. All the allegations in the petition are denied. At para 4 page 2 the plaintiff would put his case thus:- “THAT the defendant No. 2 is bound by his acknowledgment and confirmation made by the defendant No. I for the loan taken by him for and on behalf and for the use and benefit of defendant No. 2 and the promise to pay the said loan amount vide his writing dated 21.9.1991 and, in particular, when the said amount of loan, on the showing of the defendant No. 2 itself, Was used and enjoyed by it.”
IN para 4 at page 3 of the rejoinder, the second defendant states that “It is most vehemently denied that the defendant No. 2 is bound by any acknowledgment and/or confirmation made by the defendant No. 1 for the loan allegedly taken by him for and on behalf and for the use and benefit of defendant No. 2 and the alleged promise to pay the said loan amount vide his alleged writing dated 21.9.91.” In paragraph 6 of the reply, the plaintiff has given details to show as to how case of the second defendant cannot at all be true. Para 6 at page 3 runs as follows :-
“THAT the frivolity and absurdity of the defense raised by the defendant No. 2 is apparent on the face of the record as will be crystal clear from the following facts: THAT the defendant No. 2 purchased land measuring 12 Bighas, equivalent to approximately. 2-172 acres, situated in village Jonapur, Tehsil Mehrauli vide sale deeds dated 19th July, 1989, (photo copies of which were handed over to the plaintiff for creating a lien on the said lands to secure the payment of the loan amount) and already filed by the plaintiff before this Hon’ble Court for a total sale consideration of Rs. 9,75,000.00 while the alleged agreement to sell the same to the plaintiff for Rs. 2.5 crores has been falsely alleged to have taken place on or about 5.1.1991 binding the plaintiff to pay Rs. 25 lakhs as earnest money. It is impossible to believe and even unthinkable that the plaintiff would agree to purchase the aforesaid land for a sale consideration .of Rs. 2-1/2 crores in January, 1990, i.e. just after a period of 5-172 months when undisputably, the market price of the land could not, by any stretch of imagination, appreciate to a fantastic and absurd level of 2-1/2 crores, that is, Rs. 1 Crore per acre. The patent falsity, absurdity and untenability of the defense raised by the defendant that the plaintiff agreed to purchase and the defendant No. 2 agreed to sell the land for Rs. 2.5 crores and a sum of Rs. 14 lakhs was paid-by the plaintiff through defendant No. I, its director towards part payment of earnest money of Rs. 25 lakes 9 and that, under an oral agreement to sell, the defendant No. 2 forfeited the said amount on the alleged failure / neglect of the plaintiff to pay the balance earnest money of Rs. Ii lacs and that too, without any written agreement and filing its copy with statement in Form No. 37-1 before the Appropriate Authority and without any notice to the plaintiff for the alleged forfeiture, is writ large on the face of the record. It is unbelievable and preposterous to think that the defendant No. 2, who purchased the lands for a sum of Rs. 9,75,000.00 , would sell the land after 5-1/2 months, for Rs. 2-1/2 crores and that, for that matter, any purchaser would purchase the land at Rs. I crore per acre. The prices in village Jonapur and, for that matter, in the neighbouring villages in the early part of 1990, were never more than Rs. 10,50,000.00 or Rs. 11,00,000.00 for 12 Bighas. The appreciation in the price during this period of 5-172 months i.e. from August, 1989 to January, 1990, was maximum 15% and, as such, the market price was maximum Rs. 12 lacs for the said lands and, in no case, could be Rs. 2.5 crore (an unbelievable phenomena). The defense raised by the defendant is thus, ex-facie, malafide, dishonest, fraudulent, unbelievable and implausible and does not deserve any consideration whatsoever and is liable to be rejected straightaway.”
SECOND defendant admits purchase of the property with reference to which there was an agreement with the plaintiff for a sum of Rs. 9.75 lacs. At page 4 of the rejoinder the second defendant asserts “The plaintiff is now seeking to recover the amount which has been legally and validly forfeited by the answering defendant.” In the rejoinder also it is not denied that defendant No. I is a director of the second defendant.
(22) Before considering the defense of the second defendant with reference to the pleadings, the argument by the learned counsel for the first defendant has to be noticed. He submitted that the writing dated 21.9.91 is not valid and it was fabricated. The signature in the writing is admitted. What is pleaded is non-est factum. In I.A.7843/94 at page Ii in para (i) the first defendant would submit as follows :- (I)It is further submitted that the plaintiff has obtained the letter dated 21.9.91 by misrepresentation and by playing fraud upon the defendant No. I and no reliance can be placed on the same. With respect to the said letter, it is submitted that on or around September, 1991, the Income tax department conducted a raid on the premises of the plaintiff and during that period as informed by the plaintiff a criminal complaint was also lodged against the plaintiff by the property agents acting for Dr. Naresh Trehan regarding some money exchanged under the table in respect to the property deal of 14 Anand Lok and non payment of their commission. Since the defendant No. I had conducted the transaction on behalf of the plaintiff the plaintiff and his father, both of whom were under a lot of stress and anxiety at that time requested, the defendant No. I to give a letter stating that the transaction in respect of 14 Anand Lok, New Delhi, had been concluded for a total sum of Rs. 94 lakhs and that the plaintiff had to pay a sum of Rs. 2 lacs to defendant No. I towards payment of commission charges and also wanted a letter from the defendant No. I that plaintiff had paid the sum of Rs. 24 lacs towards purchase of the properties belonging to defendants No. 2 and 3 through defendant No.1. Since the defendant No. I had been conducting various property transactions for the plaintiff the defendant No. 1 agreed to do the same in good faith. However, as luck would have it, at the relevant time, some visitors of the plaintiff’s father arrived at their residence, the plaintiff’s father hurriedly took the signatures of defendant No. 1 on few blank sheets, on the pretext he would get it typed out late in the evening, which blank papers were signed by the defendant No. 1 in good faith, without apprehending any fraud at the end of plaintiff. It was only after the institution of the suit that the defendant No. 1 realized that the plaintiff had played fraud and acted contrary to his representation to the defendant No. 1. After obtaining signatures of defendant No. 1 the plaintiff has framed and fabricated a confirmation/acknowledgment letter as relied upon him in this suit. It is submitted that the contents of the letter dated 21.9.91 are absolutely false and the plaintiff is guilty of fraud. Since the defendant No. 1 had not taken any loan at all from the plaintiff the question of issuing any alleged acknowledgment/confirmation does not arise. The contents of the said letter are fabricated by the plaintiff and were never executed by the defendant No. 1.”
(23) The circumstances set up by the first defendant are so artificial and they do not deserve, in my view, even a prima facie consideration. If according to him he had signed a blank sheet, without any purpose, he should have swung into action. He had been negligent. The position of law is clearly stated in Chitty of Contracts, 27th Edition para 5 – 034 at page 316. A Division Bench of the Madras High Court considered this aspect inK.M Madhavakrishnan vs. S.R. Sami and others .
(24) Reverting to the argument in IA.7843/94, filed by the first defendant, I feel that first defendant has been very desperate and he has tried to have recourse to all pleas in his attempt to defeat the rights of the plaintiff. In para (f) at page 7 of the petition, it is stated by him thus:-
(F)That similarly in December, 1989 the plaintiff asked the defendant No. 1 to arrange for the purchase of a farm land of 2.5 acres in Village Jonapur, Tehsil Mehrauli, New Delhi. Accordingly the defendant No. I after putting great efforts was able to materialise the deal with defendant No. 2 for apd on behalf of the plaintiff with respect to the farm land belonging to defendant No. 2 situated at Mustatil No. 27 Kiila No. 14 situated at Village Jonapur, Tehsil Mehrauli and after taking approval and consent of plaintiff the deal was struck with defendant No. 2 with respect to the said land at village Jonapur for a total consideration of Rs. 2.5 crores to be paid in the following manner:
RS.25 lakhs towards earnest money to be paid on or before 5.2.90.
BALANCE amount i.e. Rs. 2.25 crores to be paid within 30 days of the receipt of clearance from the appropriate authority on its prescribed Form 371.
IT was further agreed that in the event the payment of earnest money is not completed by 5.2.90 or in the event the payment of earnest money of the sum of Rs. 25 lacs is completed, and if thereafter the sale is not completed within 30 days of obtaining clearance from appropriate authority on account of non payment of sale consideration then the earnest money whether paid in part or full would stand forfeited. It was further agreed that the oral agreement shall be reduced into writing only on completion of the payment of the earnest money which was to be completed on or before 5.2.90. Accordingly, in pursuance to the said agreement the plaintiff made the payment of Rs. 10 lacs on 5.1.90 by means of two cheques dated 5.1.90 which was received by the defendant No. 2.”
In para (i) at page 8 of the petition he would follow his own theory stated through second defendant in his application I.A.7533/94, which runs as follows :- “ALTHOUGH,in accordance with the agreement arrived at between the parties the plaintiff was required to make complete payment of the sum of Rs. 25 lacs to the defendant No. 2 being the earnest money by 5.2.90. However, the plaintiff failed to complete the said payment and paid only a sum of Rs. 14 lacs to the defendant No. 2 through defendant No. I in Installments comprising of Rs. 10 lacs by means of two cheques of 5.1.90 and Rs. 4 lacs by cheque dated 27.1.90. Thus, the plaintiff failed and neglected to make over the complete payment of the earnest money of the sum of Rs. 25 lacs as the balance sum of Rs. Ii was not paid by the plaintiff accordingly as settled between the parties the said amount of Rs. 14 lacs was forfeited by the dant No. 2 therefore no grievance can be raised in regard thereto and consequently no claim can be raised against the defendant No. I in this respect.”
It is not the case of the first defendant that either he or the second defendant informed the plaintiff about the forfeiture. The plea of automatic forfeiture without ‘” anything in writing is too far fetched to believe. Relating to cheque for Rs. 3 lakhs in the name of defendant No. I himself, he states in paragraph (h) at page 9 of the petition in the following terms:-
“(H)In regard to the payment of a sum of Rs. 3,00,000.00 vide cheque No. 540211 dated 24.5.89drawn on American Express Bank Ltd., New Delhi paid by the plaintiff to the defendant No. I it is submitted that the said payment is the part payment of the commission charges owed by the plaintiff to the defendant No. 1. As already submitted hereinbefore the defendant No. I has acted as a property broker for the plaintiff in various sale and purchase transactions of property and the plaintiff has as a matter of course, always held back payments due to be paid to the defendant No.1. It is pertinent to state here the particulars of the property transactions and the amount owed by the plaintiff to the defendant No. 1 on account of commission charges.
IN this respect it is submitted that the defendant No. I conducted the transaction of the property bearing No. 14 Anand Lok, New Delhi, which was purchased by the plaintiff for a total sale consideration of Rs. 94 lakhs from Dr. Naresh Trehan of Escorts Heart Institute. It is pertinent to state here that the plaintiff has admitted that this transaction was conducted by the defendant No. I but has falsely stated that the commission charges payable to the defendant No. 1 was Rs. 50,000.00 . The defendant No. 1 was entitled to receive Rs. 2 lakhs as commission charges for purchase of the said property. Further, the defendant No. I also acted as the property broker of the plaintiff in respect of the purchase of 35 acres of land at Chhatarpur from Shri Tejpal Tyagi and others for a total consideration of approx. Rupees Two crores two lacs only. And for this, the defendant No. 1 is entitled to receive Rs. 8,08,000.00 from the plaintiff comprising commission charges payable by both the vendor and the vendee i.e. Rs. 4,04,000.00 each as the vendor had accepted the payment of the sale consideration minus it’s share of the commission charges liable to be paid to the defendant No.1. Thus the plaintiff became liable to pay to the defendant No. I the total commission charges of Rs.8,08,000.00 for the purchase of the above said property. It is further submitted that the defendant No. I also conducted the transaction of 3.75 acres of farm land in Village Satbari from one Shahnaz Rana for a total sale consideration of Rs. 17 lacs. And for this, the plaintiff was liable to pay a sum of Rs. 34,000.00 towards commission charges to the defendant No. 1.
IN view of the above, it is clear that, in fact, it is plaintiff who is indebted to the defendant to the tune of Rs. 7,42,000.00 which is arrived at after deduct ing Rs. 3,00,000.00 from the total commission charges of Rs. 10,42,000.00 payable to the defendant No.1. Thus, it is evident that the defendant No. 1 is not liable to pay any sum as claimed/alleged at all to the plaintiff. On the contrary, the defendant No. 1 is entitled to recover over Rs. 7,42,000.00 from the plaintiff together with interest for which the defendant No. 1 initiate separate civil proceedings.”
The plaintiff filed a reply refuting all the allegations. At page 19 of the reply the plaintiff states as under :- “THE plaintiff reiterates that a sum of Rs. 14 lakhs as mentioned in paras 4,5 and 7 of the plaint, was advanced as loan to the defendant no. I in the name of and for the use and benefit of defendant no. 2. It may be stated that the defendant No. I represented that he was a director of defendant No. 2 and was duly authorised to get loan for and on behalf of and in the name of defendant No. 2 and further represented that he would also be personally responsible and liable for the amount of loan which he was receiving in the name of and for the defendant No. 2. It was on the basis of these representations, as mentioned in paragraphs 4,5 and 7 of the plaint that the plaintiff advanced a total sum of Rs. 14 lakhs to the defendant No. 2. The defendants Nos. 1 and 2 are bound by the admission / acknowledgment and promise to pay contained in his writing dated 21.9.1991.”
Again at page 23, the plaintiff puts his case thus:- “THE fact and truth of the matter is that the plaintiff did not purchase any land in Chattarpur from Tejpal Tyagi and others but he along with his other family members, purchased about 35 acres of land situated in village Satbari from Shri Tejpal Tyagi and others for a total consideration of approximately Rs. 2 crores. The very fact that no lands were purchased by the plaintiff in village Chattarpur but in village Satbari, falsifies the allegation of the defendant No. 1 that he acted as a property broker. The fact that the defendant No. 1 even does not know that the plaintiff had not purchased the land in village Chattarpur but in village Satbari, abundantly shows that he did not act as a property agent in the purchase of those lands situate in village Satbari. It is absolutely false that the defendant No. 1 acted as property agent for the sale of those lands to the plaintiff.”
The plaintiff denied that any amount was paid to first defendant towards commission. It reads as under:- “SINCE the vendors, namely, Shri Tejpal Tyagi and others received the entire sale consideration from the plaintiff and his family members through cheques for the sale of the said 35 acres of land situate in village Satbari and no amount of sale consideration is outstanding or remained outstanding, abundantly belies and falsifies the allegations of the defendant No. I that the vendors accepted the payment of the sale consideration minus their alleged share of commission charges. Since the vendors have received the full sale consideration through cheques for which the plaintiff and his family members hold receipts and other documents duly executed by the said vendors admitting and acknowledging that the entire sale consideration for the said lands had been paid through cheques, the defense of the defendant is absolutely false and is liable to be rejected summarily. It is absolutely false that the plaintiff became liable to pay to the defendant No. 1, the total commission charges of Rs. 8,08,000.00 or any other amounts for the purchase of the aforesaid lands.”
The plaintiff has also stated that the first defendant falsely claimed to be a broker for the purchase of property from one Shahnaz Rana. He states at page 28 thus :- “IT is absolutely false that the defendant No. 1 conducted the transaction of purchase of 3.75 acres of farm land in village Satbari from one Shahnaz Rana for a total consideration of Rs. 17 lakhs or any other amount. Since the defendant no. 1 does not even know that the said land was purchased for Rs. 18,50,000.00 and not for Rs. 17 lakhs for which he has falsely claimed commission at the rate of 2% amounting to Rs. 34,000.00 . This fact alone is sufficient to show that the defendant No. 1 did not act as property agent. It appears that the defendant No. 1 has heard or come to know of the various purchases of lands by the plaintiff and his family members and on the basis of the said faulty and incomplete information or knowledge, has coin’ed and fabricated a story of his acting as agent for t’iis purchases of various lands, and dishonestly claiming commission for the same and has, thus, put up his false, dishonest and fraudulent claim to forestall or to avoid the just and rightful claim of the plaintiff against him for the recovery of the loan amount with interest.”
THE first defendant filed the rejoinder on 14.2.1995. As noted above, second defendant does not deny that defendant No. 1 is also director in defendant No. 2. Defendant No. 1 in his rejoinder would state at page 16 “It is vehemently denied that this defendant ever represented himself to be a director of defendant No. 2 Company as alleged or at all.” Therefore, the fact that the first defendant represented the plaintiff as director of the second defendant Company has not been specifically denied.
MR.Tikku, learned counsel for the first 26.defendant contended that once execution of the document dated 21.9.91 is denied and it is pleaded that the suit is not maintainable and barred bytime, the burden is on the plaintiff to prove his case and in that view very crucial friable issues, have arisen for consideration and, therefore, first defendant is entitled to leave to defend without any condition whatsoever. He relied on Secretary of State for India vs. K. Tirath Ram and others, Air 1928 Lahore 216, Hasti Mal and another vs. Shanker Dan and others, and unreported judgment of this Court in suit No. 367/84. He further submitted the burden of proof is on the plaintiff and he relied on Seithammarakkath Mammad vs. Koyommatath Mammad, , Krishen and others vs. Bihari Lal Suri, Air 1977 Noc 211, Harprashad & Company Ltd. vs. Allahabad Bank and others, . According to him, when there is denial of the allegations by the plaintiff in the petition for leave to defend the matter requires a consideration by this Court and leave to defend .plll.2 has to be granted ex-debit-justice unconditionally. The principles laid down in the above cases are not applicable to the facts of this case.
(25) Yet another aspect is that assuming, as stated by the first defendant to be true, the document, in law is voidable. It is dated 21.9.91. He challenges the document after expiration of 3 years by filing the application on 5.9.94. Therefore, the first defendant is precluded from challenging the document as his plea is barred by time.
(26) The scope of Order 37 Civil Procedure Code has been considered by the Supreme Court. In Santosh Kumar vs. Bhai Mool Singh, , the Supreme Court laid down that “in general, therefore, the best is to see whether the defense raises a real issue and not a sham one. In the sense that if the facts alleged by the defendant are established there will be a good or even plausible defense on those facts.” In M/s. Mechalec Engineers & Manufacturers vs. Mis. Basic Equipment Corporation, the Supreme Court had laid down the principles, which read as under :-
(A)If the defendant satisfies the Court that he has a good defense to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend.
(B)If the defendant raises a friable issue indicating that he has a fair or bona fide or reasonable defense although not a positively good defense the plaintiff is not entitled to sign judgment and the defendant is entitled to unconditional leave to defend.
(C)If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defense, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defense to the plaintiffs claim the plaintiff is not entitled to judgment and the defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.
(D)If the defendant has no defense or the defense set up is illusory or sham or practically moonshine then ordinarily the plaintiff is entitled to leave to sign judgment and the defendant is not entitled to leave to defend.
(E)If the defendant has no defense or the defense is illusory or sham or practically moonshine then although ordinarily the plaintiff is entitled to leave to sign judgment, the Court may protect the plaintiff by only allowing the defense to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the defendant on such condition, and thereby show mercy to the defendant by enabling him to try to prove a defense.”
(27) These principles are stated in the following cases by this Court:-
1.APCO Fabrics vs. Ravi Avasthy
2.Neha International vs. Bank of America N.T. & S.A. and Others, .
3.Kiranjit Singh vs. Madan Lal Khanna, .
4.Mrs. Sushila Mehta vs. Shri Bansi Lal Arora, I.L.R. 1992 (1) Delhi 320.
WE can also usefully referred to M/s. Printpak Machinery Ltd., New Delhi vs. Mis. Jay Kay Paper Congeters, New Delhi, .
(28) Though the defense of second defendant is not entitled to consideration when the application for condoning the delay in filing the same is still pending and because defendant No. 2 was permitted to file a petition along with the application to condone the delay, I have considered all the three applications together.
(29) Now the application for condoning of delay by second defendant. In IA.7605 the second defendant prays for the condoning of delay of 55 days in filing the application to leave to defend. He would contend that on 3.8.94 when the Joint Registrar considered the matter relating to service, second defendant was not represented and the order by the Joint Registrar that the summons for judgment was served on second – defendant on 27.6.94 is not correct in law. It is stated that the service effected by affixture while the learned counsel for the second defendant vehemently contended that the procedure under Order 5 Rule 17 Civil Procedure Code has not been followed. The learned counsel for the plaintiff argued that under Order 37 Rule 3(2), there is a deeming provision and that will apply. The learned counsel for the second defendant submitted as if that there is a conflict between under Order 5 relating to service of summons and Order 37 Rule 2(2) Civil Procedure Code. In my view, the scope of these two provisions is different. Order 5 governs a particular situation whereas Order 37 Rule 2 applies to a different situation. Order 37 Rule 3, sub rules 1 to 3 are relevant and they are as follows :-
“3.(1) In a suit to which this Order applies, the plaintiff shall, together with the summons under rule 2, serve on the defendant a copy of the plaint and annexures thereto and the defendant may, at any time within ten days of such service, enter an appearance either in person or by pleader and, in either case, he shall file in Court an address for service of notices on him.
(2)Unless otherwise ordered, all summonses, notices and other judicial processes, required to be served on the de fendant, shall be deemed to have been duly served on him if they are left at the address given by him for such service.
(3)On the day of entering the appearance, notice of such appearance shall be given by the defendant to the plaintiffs pleader, or, if the plaintiff sues in person, to the plaintiff himself, either by notice delivered at or sent by a. prepaid letter directed to the address of the plaintiffs pleader or of the plaintiff, as the case may be.”
ORDER5 is applicable to situation under Order 37 Rule 3(1). Rule 3(2) would arise only after the defendant enters appearance. Therefore, the words in the sub rule “the address given by him for such service” are important.
(30) The Joint Registrar passed the order on 3.8.94 that the second defendant had been served and had entered appearance and summons for judgment was affixed in the office. Therefore, there is compliance with the sub rule.
(31) Besides this, in the instant case first defendant is the real person contesting. He is only an alias for defendants 2 and 3. Therefore, defendant No. 2 though a company can not through a different person as a director feign ignorance about the proceedings.
(32) I have gone through the averments in the petition and IA.7605/94. I do not find any reason worthy of acceptance to condone the delay of 55 days in filing the application for leave to defend.
(33) There is also IA.7747/94, filed by the second defendant, to condone the delay in filing the appeal O.A.7/94 challenging the order of the Joint Registrar dated 3.8.94. The reason given therein is that the learned counsel thought that the time available for filing the appeal was 30 days and that occasioned the delay. This is hardly a reason. The first defendant has been trying to delay the proceedings in every conceivable way. Therefore, I do not see any merit in I.A. 7747/94. I also do not find any merit in the appeal O.A.7/94.
(34) After considering the totality of the facts, I had been reflecting over the relief to be granted. The more I thought about it my conviction became firmer that I should dismiss all the applications filed by the defendants 1 to 3. Is there anything stated by the defendants, worthy of even prima facie consideration, the answer is emphatic no. The defense pleaded by the defendant is frivolous, unrealistic and not worthy of any credence. In my view, the facts disclosed by the defendants do not indicate that they have a substantial defense and that defense intended to be projected is wholly vexatious.
(35) Learned counsel for defendants 2 and 3 argued that the acknowledgment dated 21.9.91 is not binding on them. The scope of acknowledgment has been considered by the Supreme Court in Shapoor Fredoom Mazda vs. Durga Prosad Chamaria and others, . The Supreme Court had laid down that the statement on which a plea of acknowledgment is based must relate to a person having subsisting liability though the exact nature or specific character of the said liability may not be indicated in words. Words used in the acknowledgment must, however, indicate the existence of jural relationship between the parties, such as that of debtor and creditor and it must appear that the statement is made with the intention to attempt such jural relationship. Such intention can be inferred by implication from the nature of the admission and need not be expressed in words. If the statement is fairly clear then the intention should attempt jural relationship may be implied from it.
(36) The document dated 21.9.91 is in the following terms :- “I have already deposited the title deeds of my agricultural farmland measuring about 5 acres situate in Village Dera, Tehsil Mehrauli, New Delhi, by way of equitable mortgage as security for payment of the above loan. I have also already agreed which I confirm and acknowledge to have agreed that in case I do not refund the aforesaid amount together with interest @ 36% per annum compoundable every three months, then Mr. Sanjay Gupta would be entitled to sell the aforesaid agricultural land without any reference to me – and if there is a shortfall even after that, then he would be entitled to recover the balance from my other assets for the payment of aforesaid amount of loan of Rs. 23,50,000.00 along with interest @ 36% per annum at quarterly rest i.e, every three months.”
(37) The document in this satisfies the requirement laid down by the Supreme Court and it would constitute a valid acknowledgment in law. 41.The next point to be noted is the binding nature of the acknowledgment on defendants 2 and 3. Scope of Section 18 and 20 of the Limitation Act, 1963, has been considered by various High Courts and I need not deal with this at length. From the pleadings it is clear in this case, defendants 2 and 3 have admitted the vital role played by first defendant and they had also admitted in unmistakable term the receipt of money from the first defendant and they had never questioned his action. Therefore, defendants 2 and 3 on the facts and circumstances of this case are bound by the acknowledgment. It has become necessary to decide this question at this stage itself having regard to the untenable nature of the case put forth by the defendants. Therefore, the plea of the defendants that the suit is barred by time and they are not bound by the acknowledgment is rejected.
(38) Apart from arguing on the merits of the application for leave to defend, the learned counsel for the first defendant Mr. H.L. Tikku submitted that the plaintiff cannot rely upon the document dated 21.9.1991 because it is not stamped in accordance with Article 1-A of the Stamp Act. This is in addition to his argument whether it is a document evidencing acknowledgement or not, it is not evidencing a contract to pay. Article I of Schedule 1A of the Stamp Act reads as follows:- Description of Instruments Proper Stamp duty “1. Acknowledgement Fifty Paise.
39. The amount paid by way of cheque on 4.5.1989 to defendant No. 3 Rs. 7 lakhs and Rs. 3 lakhs to first defendant, on 5.1.1990 Rs. 6 lakhs paid to defendant No. 1 and Rs. 4 lakhs to defendant No. 2 and on 27.1.1990 Rs. 4 lakhs paid to second defendant are not disputed. What stated is that the plaintiff is relying upon this document dated 29.1.1991 as an acknowledgement to save limitation because the plaint was presented on 29.3.1993. According to the learned counsel for the first defendant, the document cannot be looked into for any purpose and the bar under section 35 of the Stamp Act would apply and the plaintiff is precluded from referring to the document for the purpose of claiming relief in this Case. Section 35 of the Stamp Act reads as follows :- “S.35. Instruments not duly stamped inadmissible in evidence, etc. – No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped:
(40) In my view, that the first defendant has not appreciated the difference between the acknowledgement in the Stamp Act and the acknowledgement in Section 18 of the Limitation Act, 1963. Section 18 of the Limitation Act reads as follows :-
“18.Effect of acknowledgment in writing:- (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
(2)Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it is was signed, but subject to the provisions of the Indian Evidence Act, 1872 (I of 1872), oral evidence of its contents shall not be received.”
(41) It is well settled that there is difference between the acknowledgment that is mentioned in the Stamp Act and the acknowledgment under the Limitation Act, 1963. The point that is raised by the first defendant is not res Integra and nearly 100 years ago this point was considered by a Division Bench of the Allahabad High Court in Bishambar Nath vs. Nand Kishore and others, I.L.R. Vol. Xv Allahabad Series 56 (XV 1892). The plaintiff was the appellant before .the High Court, whose suit was dismissed. It was common ground that in 1884 money was advanced by the plaintiff to the defendants. On 17.4.1886 there was a letter written by the defendants to the plaintiff. At page 58 of the judgment the learned Judges would observe :- “WE have had the letter read, and in it the respondents, after setting out that certain moneys had been advanced by the appellant’s agent in connection with the land in suit in which they were interested, go on to say that they regret that the suit had been decided against them, that the sum of Rs. 340 had been expended in connection with it and that this money they will have to pay.”
THEIR Lordships further held :- “WE are of opinion that whether a document of this kind amounts to an acknowledgment within the terms of Art. 1, Sch. i of the aforesaid Stamp Act is a fact which depends in each case upon the intention of the writer.”
(42) Therefore, the point to be considered is on the facts of each case whether a particular document is relied upon as supplying evidence of a debt. In Surijimull Murlidhar Chandiok vs. Ananta Lal Damani and another, Air 1924 Madras 352, a Division Bench of the Madras High Court had occasion to consider the scope of the acknowledgment in Article 1 Schedule 1 of the Stamp Act. The document in consideration was called a ‘rukka’. That document showed the credit entries and the balance amount due at the last occasion and then the words “balance payable up to Kartik Sudh 1st of Samvat 1974 (that is 15.11.1917) Rs. 4,397-12- 3”. The question was whether that was an acknowledgment within the definition of the acknowledgment within the Stamp Act. After considering the various authorities the Court observed as follows :- “THAT being the state of the authorities, the Court has to apply its mind to the questions-looking at the document and the surrounding circumstances- what was the intention with which that document was given; was that meant to be a bare acknowledgment and a promise to pay to be used in evidence against the sender, or was it sent for some other dominant purpose? In my judgment, the answer must be that it was given with the intention that it was to be a statement of account as between the parties-containing entries of payments by the defendant as well as a statement debts due from him, and also a statement of the calculation of interest, and the rate of interest which the defendant admitted that he was under a liability to pay. In these circumstances in my judgment, the document is not an acknowledgment and ought to have been admitted.”
(43) In Ambica Dat Vyas vs. Nityanund Singh I.L.R. 30 Calcutta 687 a Division Bench of the Calcutta High Court quoting from Ilr 21 Bombay 201 it was observed :- “IN each case the instrument of acknowledgment must be carefully examined in connection with the surrounding circumstances to ascertain whether it has been signed to supply evidence of a debt.”
THE same view has been taken by the Madras High Court in P. Ramaswami and others vs. Chandra Kotiayya N.M.R. Nagappa Chetty and others vs. V.A,A.R. Firm, Air 1925 Madras 1215 and Magham China Subbaroyydu and others vs. Vangala Narasimha Reddi and another . In Tilakchand Ratanlal Marwadi vs. Rarnkisan Ganeshdas Marwadi and others, Air 1938 Nagpur 51, Pollock J.observed:- “IT has been suggested that if a document contains an admission of liability which would save limitation under S.19, Limitation Act, then it is necessarily an acknowledgment of a debt falling under Art.l of Sch. 1. That is not so. In order to fall within the terms of Art. 1 of Sch. 1, the acknowledgment must, as I have pointed out, be written with the intention of supplying evidence of the debt.”
THIS view of Justice Pullock J. would provide a direct answer to the contention of the learned counsel for the first defendant. The Madras High Court again had an occasion to consider the question in Sripada Sambasiva Rao vs. Kald Venkatasutyanarayanamurthy and others, . It is not the case of the defendants that the document dated 21.9.1991 was intended to be the evidence of the debt. They cannot say because defendants admit the payment of moneys by the plaintiff through cheques. In Suraj Mat Kalu Ram vs. Vlshan Gopal, , a Division Bench of the Punjab High Court, after referring to Article 1 Schedule 1, observed :- “WHAT is material in the present case is that for an acknowledgment to come within the scope of this Article it must have been made by the debtor and signed to supply evidence of the debt. That is not necessary for an acknowledgment under S.19 of the Limitation Act.”
(44) In Raj Sahib Rarndyal Ghansi Ram and Sons and others, vs. Ramnivas, , the Division Bench of the Andhra Pradesh High Court followed the dicta in Bishambar Nath vs. NandKishore and othersl.L-R. 15 Allahabad 56, Jamshedji Hormasji vs. Gordhandas Goculdas Air 1921 Bombay 201, Surjimull Murlidhar Chandiok vs. Ananta Lal Damani and another Air 1924 Madras 352, Air 1925 Madras 1215 (supra), Jivanlal Chimanlal Mehta vs. Pramodchandra Chimanlal Mody, . The same view is taken by the High Court of Jammu & Kashmir in Ghulam Mohamad Soft and others vs. Shivji Bagiffi, Air 1960 Jammu & Kashmir 149. The Bombay High Court had again considered the matter in Govindram Mihamal vs. Chetumal Vlllardas, . Deshmukh J. considered the matter in great detail. In the beginning of the judgment, the learned Judge would note “This is plaintiffs appeal, whose suit for recovery of amount under a sarkar note has been dismissed by the two courts below.
(45) The facts are noted by the learned Judge for the present purpose at page 253 :- “MITHAMAL the father of the plaintiff, as a karta of the joint Hindu family, advanced a loan to the defendant on 19.6.1950 under a sarkar note. The loan was renewed or acknowledged by another sarkar note, dated 9.6.1953. There was a third sarkar note, dated 9.6.1956. After their renewal Mithamal died in or about February 1958. The plaintiff, who is the eldest son of Mithamal, has filed the present suit on 15.6.1959 for recovery of the amount due under the sarkar note. The plaintiff has claimed the principal amount under the sarkar note together with interest.”
THE argument on behalf of the defendant was noted by the learned Judge at page 253 :- “YET another defense was that the sarkar note was an acknowledgment within the meaning of Article I of Schedule I of the Stamp Act. As the subsequent acknowledgment notes do not bear any stamp, they are inadmissible in evidence for any purpose.”
THE learned judge noted the document Sarkar Note in paragraph 7 at page 254 and stated thus :- “IT is not being disputed or doubted that both these documents are acknowledgments. Unless they are acknowledgments, they would not fall either under Section 19 of the Limitation Act, or Article 1 of Schedule I of the Stamp Act. The entire writing of the two sarkar notes of 1953 and 1956 appears to be in the handwriting of the defendant. He has signed below those entries. There is an attestation by a witness below each of these entries. The defendant admits in these entries in the account books that the amount of Rs. 2060.00 and Rs. 2200.00 respectively was Khata baki from the last page of the note book. It is, therefore, an unconditional acknowledgment that he is liable to pay the amount mentioned as brought forward in the account books. Would such an acknowledgment fall only under Section 19 of the Limitation Act of 1908, or would it fall under Article 1 of Schedule I of the Stamp Act.”
(46) The learned Judge further observed at page 254 :- “SINCE a document could contain in it several kinds of averments it is necessary to determine the dominant intention of the parties in executing the document concerned. Was it meant to be a document supplying evidence of the debt or was it merely an acknowledgment of liability in respect of the debt or property supplying a fresh period of limitation? In order to find out the real intention of the parties, it is permissible to take into account the surrounding circumstances. If the result of such examination leads to the conclusion that the amount was not intended to supply evidence of the debt, then it may not fall under Article 1 of Schedule I of the Stamp Act.” The learned Judge noted after analysing the document that the dominant intention of the execution, therefore, was not to supply of evidence of debt but was merely to acknowledge unconditional liability to pay and the documents were admissible in evidence for proving the acknowledgement of the debt. They also provide a fresh cause of action and the suit based on them is clearly within time.
(47) In the light of the legal position, the argument on behalf of the defendants that the document dated 29.1.1991 is not admissible in evidence because it is not stamped is not at all acceptable in law. In my view, the document does not require to be stamped within the meaning of Article I of the Stamp Act. At the stage of considering the question of leave to defend this has to be considered because by putting forth the argument the defendants sought to project a friable issue in the case. If there was any issue on this point, one may say that a chance should be given to the defendants. Therefore, even on this aspect the case of the defendants is not at all tenable in law. It can not at all be countenanced. Therefore, the document dated 21.9.1991 cannot at all be challenged by the defendants.
(48) For all these reasons, IA.7843/94, filed by the first defendant for leave to defend, is dismissed. IA.7605/94, filed by second defendant for condoning the delay in filing the application for leave to defend, is dismissed and IA.7533/94, filed by second defendant for leave to defend, is also dismissed. I.A. 7747/94 for condoning the delay in filing O.A.7/94, filed by the second defendant, is dismissed. O.A. 7/94 is also dismissed. I.A.4760/94, filed by the third defendant, is dismissed. There shall be no order as to costs in all applications.
(49) Consequently, the plaintiff is entitled to judgment. The plaintiff is entitled to recover Rs. 10,18,225.00 from the first defendant, Rs.41,42,471.00 from the second defendant, Rs. 16,08,162.00 from the third defendant, which according to the plaintiff was due as on 28.2.93. The learned counsel for the first defendant relying on 60 Bombay Law Reports 1371 submitted that the interest claimed by the plaintiff is usurious. I fail to see as to how this decision is of any assistance to the defendants.
(50) Now the relief of the plaintiff has to be considered. The plaintiff claims interest @ 36% per annum with quarterly rests from the date of plaint till the date of realisation. The plaintiff has already charged interest@ 36% per annum with quarterly rests till the date of plaint and in the interest of justice I feel that the defendants should not be further burdened with the same amount of interest. I, therefore, feel that the plaintiff is entitled to simple interest @ 12% per annum on the principal amounts due. The plaintiff prays for a decree against defendants 1 to 3 jointly and severally. That is not permissible.
(51) Therefore, I pass a decree directing
(I)the first defendant to pay the plaintiff the sum of Rs. 10,18,225.00 with simple interest @ 12% per annum from the date of plaint i.e. 29.3.93 on the principal sum of Rs. 2,50,000.00 up to the date of realisation;
(II)the second defendant to pay the plaintiff the sum of Rs. 41,40,471.00 with simple interest @ 12% per annum on the principal sum of Rs. 14 lakhs from the date of the plaint till the date of realisation;
(III)the third defendant to pay the plaintiff the sum of Rs. 16,08,162.00 with simple interest @ 12% per annum on the principal sum of rs. 7 lakhs from the date of the plaint till the date of realisation.
(52) In view of the fact that the contract rate of interest had been 36% per annum with quarterly rests, I also feel that the defendants should not be burdened with costs of the suit. Therefore, I direct the parties to bear their own costs.