IN THE HIGH COURT OF KERALA AT ERNAKULAM
AS.No. 746 of 1996()
1. M/S.NAVADURGA CLAY
... Petitioner
Vs
1. SYNDICATE BANK
... Respondent
For Petitioner :SRI.K.SHRI HARI RAO,K.R.RAGHUNATH
For Respondent :SRI.S.V.BALAKRISHNA IYER
The Hon'ble MR. Justice THOTTATHIL B.RADHAKRISHNAN
The Hon'ble MR. Justice P.BHAVADASAN
Dated :28/10/2010
O R D E R
THOTTATHIL B.RADHAKRISHNAN &
P. BHAVADASAN, JJ.
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A.S.Nos.746 OF 1996 & 83 OF 1997
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Dated this the 28th day of October, 2010
JUDGMENT
Thottathil B.Radhakrishnan, J.
1.These appeals arise from a suit for recovery of money.
AS.83/97 is by the plaintiff bank and AS.746/96 is by the first
defendant. We will hereafter refer the parties in terms of their
status in the suit.
2.The 4th defendant Lesli Aron had a proprietary establishment.
Going by the materials on record, he entrusted that
establishment to the first defendant K.Parameswara Holla. At
that time, certain outstandings were due from the 4th
defendant to the plaintiff bank in OSL.22/76, OD.2/77 and
SOD.1/77. The first defendant applied and obtained
OSL.48/79 and SOD.1/79 for Rs.75,000/- and Rs.30,000/-
respectively from the plaintiff. The amount of Rs.75,000/-
covered by OSL.48/79, under proper authorization, was
AS.746/96 & 83/97
2
credited against the outstandings due to the plaintiff from the
4th defendant. Thereafter, in 1981, the credit limit of SOD.1/79
was enhanced to Rs.45,000/- and the said account was
renewed as SOD.2/81. These materials show that from 1979
and 1981, the transactions were in terms of what is stated
above. The borrowal made by the first defendant was
supported by collateral security offered by defendants 2 and 3.
They had also executed Demand Promissory Note in favour of
the plaintiff. With the passage of time, amounts accrue to be
outstanding. This led to a suit notice in 1984 and the
institution of the suit, from which these appeals arose, in 1985.
3.The suit was initially laid against defendants 1 to 3, i.e., the
principal debtor Parameswara Holla and those who stood as
sureties or had offered collateral securities. On the basis of
their pleadings, Lesli Aron was brought in as the 4th
defendant. Defendants 5 and 6 were also brought in since they
were attaching creditors against the first defendant and the
property involved in the suit. Pending the suit, the third
AS.746/96 & 83/97
3
defendant K.Narayana Holla died. His legal representatives
were brought on record as supplemental defendants 7 to 11.
4.Before us, we have the plaintiff and the first defendant. The
plea of the first defendant, who had filed a joint written
statement along with the 3rd defendant, was that they did not
approach the plaintiff for financial assistance; defendants 1
and 3 are not aware of the loans borrowed by the 4th
defendant; plaintiff took signatures of the first defendant on
various blank papers and documents were concocted and
produced along with the plaint and that defendants 1 and 3 are
not liable. They also pleaded that the acknowledgments of
debt produced are not true and genuine and that the pronotes
produced are not supported by consideration. The first
defendant filed an additional written statement contending
that he did not agree for the adjustment of Rs.75,000/- against
the loan amount of the 4th defendant. He further stated that
though he had purchased the proprietary unit from the 4th
defendant Lesli Aron, that purchase was set aside by a civil
AS.746/96 & 83/97
4
court in an execution proceedings and since that sale in his
favour had become invalid, he was not liable to pay any debt
referable to the 4th defendant.
5.The second defendant filed a separate written statement
contending that defendants 2 and 3 were asked to sign
documents by the the first defendant and the then Manager of
the plaintiff. The Manager of the bank is accused of having
taking signatures of defendants 2 and 3 in blank papers and
printed forms. The second defendant states that the plaintiff
bank and the first defendant played a fraud on defendants 2
and 3 who, according to him, are entitled to be discharged of
all liabilities.
6.With the aforesaid, the burden of proof lies on the plaintiff to
prima facie prove the transaction and the burden would then
shift to the defendants, having regard to the plea they have
against the transaction and the documents.
AS.746/96 & 83/97
5
7. We find that PWs.1 to 3 were examined on behalf of the bank
and the first defendant alone tendered oral evidence as DW1.
8.The court below did not find any material to disbelieve the
documentary evidence on record. Those materials proved the
transaction of lending by the bank to the first defendant,
supported by the suretiship offered by defendants 2 and 3.
With this material, in our view, unfortunately, the court below
was persuaded to go into the transaction between defendants
1 and 4 and also as to whether there was any novation of
contract between the plaintiff and the 4th defendant. In our
view, the question of novation between the plaintiff and the 4th
defendant were totally alien to the defence set up by
defendants 1 and 3 in their joint written statement as against
the plaint claim.
9.In view of the fact that documentary evidence proved the
lending made by the plaintiff to the first defendant as
OSL.48/79 and SOD.1/79, renewed as SOD.2/81, and with the
AS.746/96 & 83/97
6
supporting materials, the plaintiff was entitled to a decree as
sought for. The appeal of the plaintiff, AS.No.83/97, is
therefore, entitled to succeed while the appeal of the first
defendant, AS.746/06, is liable to be dismissed.
10.As regards the question of future interest, we notice that the
transaction is a commercial one in terms of explanation II to
Section 34(1) CPC and the proviso to that sub section. Taking
into consideration the totality of the facts and circumstances,
we order that the eligible rate of interest chargeable from the
date of suit till the date of realization on the principal amount
would be 12%.
11.In the result,
(i)AS.746/96 is dismissed.
(ii)AS.83/07 is allowed, setting aside the impugned decree to
the extent it is against the plaintiff and the plaintiff is
AS.746/96 & 83/97
7
granted a decree against defendants 1, 2 and against the
estate of the third defendant for a sum of Rs.87,191/21
with future interest at 12% per annum from the date of
suit, with proportionate costs.
(iii)Defendants 7 to 11 are not personally liable but are
liable only to the extent of any property they would inherit
from the third respondent.
(iv)The suit is decreed with costs throughout, recoverable
from defendants 1 to 3.
Sd/-
THOTTATHIL B.RADHAKRISHNAN,
Judge.
Sd/-
P.BHAVADASAN,
Judge.
kkb.30/10.