{"id":189180,"date":"2009-12-07T00:00:00","date_gmt":"2009-12-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/g-shyama-bhat-so-ishwara-bhat-vs-karnataka-vyavasaya-varthaka-on-7-december-2009"},"modified":"2014-01-12T12:21:57","modified_gmt":"2014-01-12T06:51:57","slug":"g-shyama-bhat-so-ishwara-bhat-vs-karnataka-vyavasaya-varthaka-on-7-december-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/g-shyama-bhat-so-ishwara-bhat-vs-karnataka-vyavasaya-varthaka-on-7-december-2009","title":{"rendered":"G Shyama Bhat S\/O Ishwara Bhat vs Karnataka Vyavasaya Varthaka &#8230; on 7 December, 2009"},"content":{"rendered":"<div class=\"docsource_main\">Karnataka High Court<\/div>\n<div class=\"doc_title\">G Shyama Bhat S\/O Ishwara Bhat vs Karnataka Vyavasaya Varthaka &#8230; on 7 December, 2009<\/div>\n<div class=\"doc_author\">Author: N.Kumar And C.R.Kumaraswamy<\/div>\n<pre>M1-\n\nIN THE HIGH COURT OF KARNATAKA AT BANGALORE\nIDATED THIS THE 7\"\" DAY OF IDECECMBFCR. 2009\n\nPRESENT\nTHE I\"iON'BLE3 MR.\u00ab-JUSTICE N.KUM.AR\n\nAND\n\nTHE HONBLE2 MRJUSTICE C.ra.KuMARAS.--ii2\\}'A;$\/i\ufb01ff'   \n\nREGULAR FIRST APPEAL Ns;3.1.ioif.\u00e9d4O'i'7; \u00bb'   \n\nBETVVEEN :\n\nSri. G Shyama Bhat.\n\nS\/0 Ishwara Bhai.\n\nMajor  \nNow residing at Man.r'ia..If1ga\u00abiVa \" \nPanaje, Puituri * .' _   AA \nD.K. district.      Aiapeiiant.\n\n(I-3y Sri. K M  V\n\n1 Karr1.\u00e91i.rak.a V'.y2ir1J\u00e91s.;i'ya Va rizhaka\nS\u00e9lllgh\u00e9li L3\u00e9.d:.\"Arisa1'i Road\n\n\u00bb~'Bi11i'de1'._ M'ziz'1_g_&amp;1lv()1*c?-- 1.\n\n' V.V\"'.R\u20acEphi'\u20ac\u00a7\u20acI1tCfd by its Manager\n\n .SI'i,. 'B'\u00abS ''I\"3__an.sari\n\n\"  S','_Q\"=a\\_\/\u00e9: r1\"k,a:.iran1ana Bhat\n\n- '-ReSi'cl'i'ng[:=at Mangaiore\n,._D.i{,.c.i'ifs'iri(:t..\n\n Sri_. 3~I~{ Govinda Rao\n\nAA ;,_S\/0\"' Ramappayya\n Major\n\" Residing at Field Street\n\nM&amp;1IlgEiiO1'\u20ac*}. k\/\/\n\n\n\n3 Sri. P B Anduiitrh\nS\/0 Araby\nMerehaiit. Major\nResiding at KLikkuj::1dka\nSullia Taiuk. Kukktijadka\nD.i{. disirict..  Respondents<\/pre>\n<p>(Sri. M.C. Ravi Kumari Advocate<br \/>\nFor Ravi and Ravi, Advocates for 1&#8217;esp0ndeh&#8217;i.\u00bbNrj&#8217;;._1.}..<br \/>\nisms RFA M;fHed under_scpuon&#8221;9s oi cps &#8221;<br \/>\nagainst the Judgment and Decree datieci-:&#8217;2.3.&#8217;1_.2001<br \/>\npassed in O.S.N0. 86\/83 by the 13$&#8221;e.A;Vddii.ti&#8217;01&#8217;ialV&#8217; <\/p>\n<p>Judge, (Sr.Dn.] and CJM, Maiigaioife. dee_&#8217;ife&#8217;evir&#8217;1g&#8217;=.the V&#8217;<br \/>\nsuit [er recovery of money&#8217;._     <\/p>\n<p>This appeal coming 0nd\u00bbVV&#8221;!](:)1&#8242;,_heai&#8217;indg&#8217; this day,<br \/>\nN.Kumar J., d\u20ac1iV\u20acI&#8217;\u20acv(&#8211;3i.jVjh\u20ac&#8217;fb&#8217;ii&#8217;O.)}$&#8217;i}Tg.I*  <\/p>\n<p>JIiDkLMEyNTjf,<\/p>\n<p>Th_1__s&#8230;. Ci&#8217;:\u20ac*ii&#8217;eii&#8221;c!.ei&#8217;nt&#8217;s&#8221;&#8221;&#8216;a&#8217;i)pea1 against the<br \/>\njudgmefzi and _de:,c&#8217;?r.e&#8221;e.._.tis\u00a3T,_the Trial Court which has<\/p>\n<p>decreed thegsuit&#8217;0_f&#8221;i:.he~&#8230;&#8217;}5iainiiii as prayed for.<\/p>\n<p>&#8216;  &#8220;\u00ab.F&#8221;0ii&#8221;~.ti&#8217;ie purficise 01&#8217; eoiiveiiieiice. the parties<\/p>\n<p>are_d_i&#8217;Veefe:i&#8217;\u00bb\u00a7e&#8217;d.\\ aid. their ranks as referred to in the<\/p>\n<p>ongmaisgei<\/p>\n<p>&#8216;V3. &#8216;The,Vpiair1tiff is a joint stock Company<\/p>\n<p> :ie~I1e0i&lt;p0i&#039;Vat&#039;ed under the Indian Companies Act. It<\/p>\n<p>X\/d<\/p>\n<p><span class=\"hidden_text\">-3-<\/span><\/p>\n<p>is carrying on the business oi&#8217; Commission Agency<br \/>\nin agricuitural produce such as arecanuts.<br \/>\ncoconuts. plaintins, banana. pepper. cardamom<br \/>\nand forest produce.\n<\/p>\n<p>The first defendant was<br \/>\nManaging Director as per resoiutiori<br \/>\n15.09.19&#8243;75. He continued ivthxe<br \/>\nDirector unit} he resign\u00bbed<br \/>\nGenerai Administration of<br \/>\nin him. subject to.&#8217;:t&#8217;h\u00ab_e  theVV&#8221;BAo&#8217;ard of<br \/>\nDirectors in Rates and<\/p>\n<p>Regu1ations.&#8221;i:_ie&#8217;&#8211; had the  grant loans<\/p>\n<p>upto Rt3A_1300\/;i&#8217;fwithj&#8221;Qr&#8221;&#8221;&#8211;u?ithout. security. Without<\/p>\n<p>the express'&#8221;peei9&#8217;ini&#8217;s.s1&#8243;o\u00abri=of the Board of Directors.<\/p>\n<p> the  had to powers to grant<\/p>\n<p>ioagas, _Vo.r&#8211;_t*o give credit for sums exceeding<\/p>\n<p>&#8216;~d.3&#8217;i*lx.e had no powers to mortgage or<\/p>\n<p>V.hypo&#8217;the&#8211;..catve&#8217;; the properties or assets of the<\/p>\n<p>.coAn1ipan&#8217;y. without express permission of the Board<\/p>\n<p>ite._of_VV&#8221;Di&#8217;rectot*s. The Board of Directors of the<\/p>\n<p>&#8220;p-iaintiff&#8221; usualiy meet oiice in a month. During<\/p>\n<p>\\\/<\/p>\n<p><span class=\"hidden_text\">-4-<\/span><\/p>\n<p>such meetings at} decisions regarding granting of<br \/>\nloans or advances or providing credit faciiities<br \/>\nwould be taken. The Managing Director was<br \/>\nexpected to placebefore the Board of Directorsaii<br \/>\nthe papers for their consideration. The B::)a&#8217;rfc_&#8221;ip:&lt;.V:of&#039;<br \/>\nDirectors with the advice and  V&#039;<br \/>\ndefendant. the Managing Dir.cc~:t\u00bbo&#039;rp<br \/>\nsecond defendant. who is<br \/>\nwould take decisions. V t V t M<br \/>\nThe second defendaI1t:o.i.s:.tvhe&#039;-,Chiei&quot;\ufb01ccpoitintant<\/p>\n<p>of the company.  down in an<\/p>\n<p>order dated 1.8_;&#039;O\u00a7&#039;\u00abL   Directors.<\/p>\n<p>His duhvtpies and&#039;:&#039;:&#039;..r4es,pVo.risibilities as per the said<\/p>\n<p>I&#039;\u20acSO1L1?LiO1&#039;Vi&quot;.._&quot;&#039;()f &quot;.B_.oard of Directors were.<\/p>\n<p>..V.inte1ra31iat&#039;.* to&quot;&#039;:31ai1it,airi correct and up-to&#8211;date<\/p>\n<p>AXacc\u00aboants;_*,p&#039;i&#039;.epare and submit, quarterly tria}<\/p>\n<p>b&quot;a1a.n_ce&quot;tog._th,e&quot;V.Board. to prepare and submit fina}<\/p>\n<p>_ bata&#039;.t1ce&quot;&#8212;V:&#039;G.h&#039;e&#039;ets to the Board, to watch the working<\/p>\n<p>the Depots. to submit, reports to the Manager<\/p>\n<p>_&#039;=_ar1_d&quot;&#039;i:he President regarding any irregtiiarities. to<\/p>\n<p>&quot;hcheck all the slips prepared for each payment of<\/p>\n<p>-5&#8243;\n<\/p>\n<p>amounts after verifying the eorre(:i.ness and<br \/>\nregularity of such proposed payments. to submit<br \/>\nregular siaiuiory reiurne. to make payment of<br \/>\nvarious taxes and fees etc. And he should sub..ini\u00a3<br \/>\nto the Board all the consignors debit.<br \/>\nwhich are more than one year old  M<\/p>\n<p>carry out all the resolutions voi&#8221;&#8221;i;-he l3oav.rjd&#8217;:&#8217;arid&#8211;f!.1e&#8217;-.&amp;<\/p>\n<p>must report the action iaken s.ho.Tu}d&#8217;i<\/p>\n<p>distribute work among ih_e~.__s1ai&#8221;i&#8221; _ arid s}&#8221;i;1f)&#8221;eir\\rise<br \/>\ntheir Work. In short. his. :A'(:lv1,_1&#8217;Ii),{ wa\u00e9; ~I,o Hg\u00e9ee all<br \/>\nfiriancial transactioris~&#8217;jb.e&#8217;ir1\u00a7\u00a7V}carii.ed._ or: properly<\/p>\n<p>and in aCco1&#8217;da:2&#8211;ee wj&#8217;i&#8217;h&#8217;\u00bb&#8211;i.aw&#8221;ai1d 1&#8243;.eso&#8217;.Eutions of the<\/p>\n<p>Board  to report about any<br \/>\nirregulaivtie&#8211;s  or {he Board.\n<\/p>\n<p>&#8216;l&#8221;he_ l3o.a1.&#8217;.vCi&#8221;o&#8217;i1&#8242; [5i1&#8217;ewc1,ors of the plaintiff during<\/p>\n<p>1-l l}-1e 1982 were agrieuliurisis<\/p>\n<p>2&#8242;::_.3\u00e9Eod.iVng:&#8217;=i_An&#8221; Villjages. who had no knowledge about<\/p>\n<p>marketing_o.rAladminis1&#8242;.ration of the company. The<\/p>\n<p>ill.&#8217;-&#8216;\u00ab._&#8217;Vi7.i1&#8217;St d&#8217;eVi_fendant is a law graduate and holds a<\/p>\n<p> v.&#8217;C&#8217;_O&#8217;fI&#8217;lf&#8217;f1A&#8217;\u20ac1&#8217;C(&#8216;3 Degree and is liaving expert. knowledge<\/p>\n<p> practical skill in marketing and<\/p>\n<p><span class=\"hidden_text\">-6-<\/span><\/p>\n<p>admiriist.rat&#8217;ior1 of the (&#8216;.OI}&#8217;1;)&#8217;c11&#8217;}_V. The Board of<br \/>\nDirectors had piaeed absolute faith and trust in<br \/>\nhim. The second defendant who has served in the<br \/>\nAccounts Department for several years <\/p>\n<p>trusted officer of the plaintiff. Compariy. __&#8217;1&#8243;he-\u00abtie-i:o&#8217;ire_4_&#8217;*_<\/p>\n<p>the Board of Directors had no 1&#8217;easor.&#8211;.t:.ogsu:sp_eet'&#8221; &#8216;<\/p>\n<p>the Conduct and activities of the <\/p>\n<p>2: 0 fl<\/p>\n<p>2. After the resigriatiori<br \/>\n03.03.1982 the Board or D&#8217;iv&#8217;r&#8217;e:.et.()_r-S  alppraise<br \/>\nthemselves of the   by<br \/>\nclosely examining  of the<br \/>\ncompany.  f.:f\u00a7f1(3jJi{r10\\Af several<br \/>\nunsavozvtiirti :ovi&#8217;\u00abVV.:&#8217;_&#8217;theihdadihiiiistration of the<br \/>\neompar1zyvVVat  defendants 1 and 2<\/p>\n<p>Co1luSI&#8217;Qn  of the defendants. The<\/p>\n<p> aiid'&#8221;2&#8243;;&#8221;Vthe Managing Director and the<\/p>\n<p>\u00b0~_&#8217;:h&#8217;ie.i&#8217;\u00a5.}3s;\u00ab&lt;;eoi;.i1i&#039;ai1t. respecftiveiy. had Conducted<\/p>\n<p>themse1v_es7L_iri such a manner that there was<\/p>\n<p> appare~~nti;_y no room for suspicion. and the Board<\/p>\n<p>_Di&#039;i&#039;=\u00abeetors concerned themselves with the papers<\/p>\n<p>V___&quot;&quot;pei;taining to the admiriistration placed before<\/p>\n<p>u&quot;,i.hem. The Board of Directors were therefore<\/p>\n<p>X<\/p>\n<p> I07 lend<\/p>\n<p>c7&#039;r<\/p>\n<p>shocked to find defendariis l and 2. misusing the<br \/>\ntrust. and confidence reposed on them have had a<\/p>\n<p>deep laid plan for rnaking illegal gain against\u00bb-__t_he<\/p>\n<p>interest. of the plaint.il&#039;f company. The<br \/>\n1 and 2 colluded together and acE&#039;ed-:4&#039;:iilleg.\u00e9\u00a7&#039;lEy1V_&quot;&quot;e V&#039;<br \/>\nunlawfully and contrary to  <\/p>\n<p>and the Memorandum and Ar1&quot;iycle__s&quot;&#039;loI&#039;l&#039;As&#039;s;.ociav\u20ac;&quot;:&#039;o_n~l_y<\/p>\n<p>of the Plaintiff Company. V\u00bb .\n<\/p>\n<p>On 27.06. 1980  1&#8217;\u00e9&#8217;1%&#8217;\u00a7&#8217;t_f djefelndantHlpnrported<br \/>\nto have advanced to the :_t.hlii&#8217;rd:  a sum of<\/p>\n<p>Way Bill<\/p>\n<p>Rs.94\u00bb,600\/~ o&#8217;_w51&#8217;~th;:_ \u00a7b\u00e9rsi-s &#8221;<br \/>\nl\\lo.78398   was purported<br \/>\nto haye  21 Transport Agency<\/p>\n<p>M\/S.S.A.S&#8221;.,__alnVdVx:3_o4ns; yTS_.ull1a. On verification of all<\/p>\n<p>___.1,he yreqleve1nt&#8217;  registers it is found that<br \/>\n as noted in the said way bill<\/p>\n<p> by the plainiiff company. ll. is<br \/>\nl _qui&#8217;Le&#8211; clveizilrvldillronl the records that the defendants 1,<br \/>\n .an_.d u3&#8243;*&#8217;have colluded among ixhemselves and have<\/p>\n<p>_\ufb02_b&#8221;r_o&#8217;ug&#8217;ht about among t.l1en1selves certain records<\/p>\n<p>colour of credibility to the said<\/p>\n<p>l\/<\/p>\n<p>\/,<\/p>\n<p>_8-\n<\/p>\n<p>transaction. The first defendant appears to have<br \/>\ntaken a typed let.ter from the third defendant.<br \/>\nwherein a request. was made for advance to him a<br \/>\nsum 01&#8242; Rs.9-4._600\/wagainst the security of-&#8220;ul_\u00bbOO<br \/>\nbags of arecanuts alleged to have been<br \/>\nby him as per the aforesaid Way<br \/>\nfrom Kukkujadka. The first<br \/>\nappears to have obtained;l&#8217;:&#8217;.Va&#8217;n_l<br \/>\nPromissory Note dated  the<br \/>\nthird defendant and zone lVAb.ral&#8217;ti.in*i.._Ku.n&#8217;ch.iA,  per<br \/>\nthe prevailing  practice of<\/p>\n<p>such a huge loarreou-l&#8217;d'&#8221;n:oi hA.\u00a7t*&#8217;54&#8243;\u20ac  given by the<\/p>\n<p>first deg&#8217;hten&#8217;danf.i the sanction of the Board<br \/>\nof Directors.  amount could be<\/p>\n<p>disbursed   &#8216;tAh\u20acV&#8217;Tl3OUnd\u20aci1 duty of both t.he<\/p>\n<p>xi&#8217;d.ei&#8217;e&#8221;ttria:r1\u00abts&#8217;vi.A.1  to check up and satisfy<\/p>\n<p> the goods noted in the way bill<\/p>\n<p>hadylhheenyliteceived by the company. And it is the<\/p>\n<p> __4&#8217;u_.sual pra_ctic:e to note in the Debit Slip the actual<\/p>\n<p> oi&#8217; the goods standing to the credit of the<\/p>\n<p>&#8216;V&#8221;=.___&#8221;&#8221;.&#8217;pei:son who took the loan. The receipt of all the<\/p>\n<p>&#8220;consignments are always recorded in a specific<\/p>\n<p>E\/M<\/p>\n<p>register. And there is a register kept at the<br \/>\ngodown of the Company known as Inward<br \/>\nWeighmem Register. And in the office there is<br \/>\nanother inward Weighmenl. Register I&#8217;1&#8243;1E1i1&#8217;11,vEV).\u00a7&#8217;,!I&#8217;:.1r\u20ac,(.L1.<br \/>\nin both the Inward Weighment<br \/>\nreceipt. of all consignments are<br \/>\nparticuiar consignment of IOQJ'&#8221;o1&#8242;<br \/>\non the security of which a\u00bb.s.t1n1A:4o.fd:&#8217;Re.9\u00e9i.iV\u00a33d&#8217;O,\/L<br \/>\nadvanced was not written  V.  oi&#8221;\n<\/p>\n<p>Rs.94,600\/~ to the t.h&#8221;i~r_d  edx\/divdenjced by<br \/>\nthe Debit Slip No.2dVd&#8217;ett:eVd&#8217;i&#8221;&#8216; and the<\/p>\n<p>ledger entry _..o.i7.c:Vt&#8217;_&#8217;he   &#8221; Pfijjart from the<\/p>\n<p>above  fudrdther and subsequent<br \/>\nadvances  defendant to the third<\/p>\n<p>defeiidaiit or; v_VE1&#8217;:&#8217;Vi.f()Ll.E~&#8217;J: dtttes without the sanction of<\/p>\n<p>did&#8221;-the   1)1\u00a7?e'&lt;:&#039;:&#039;o&#039;i~ and finally as on 31.07.1982<\/p>\n<p> found due from the third<\/p>\n<p>deienddantddyrdyets Rs.1.23.225\/~. The above said<\/p>\n<p>H,,__,4itrarlsactdions were kept out of the knowiedge of the<\/p>\n<p>&quot;\u00a7o.ard=_.of Directors and indeed were never brought<\/p>\n<p>V&quot;=._,.j&quot;&quot;&#039;toV&#039;[;the notice of the Board of Directors in their<\/p>\n<p>&#039;Wmeeting. There was no occasion for the Board of<\/p>\n<p>\\i\/<\/p>\n<p> the defendants 4 and 5 appear<\/p>\n<p><span class=\"hidden_text\">-10-<\/span><\/p>\n<p>Directors to know these transactions and the first<\/p>\n<p>defendant. under the rules Could not have<\/p>\n<p>sanctioned the above loans. The second defendant<\/p>\n<p>who is a responsible officer in the pIaiy&#8217;h&#8212;-t;iff<\/p>\n<p>company ought to have brought this n1atte.r_ll*!.o&#8217;thle-\u00abV<br \/>\nnotice of the Board of Directors of the&#8217;helloiripanlyiii<br \/>\nHe has kept quiet and he has&#8221;&#8221;le&#8217;o&lt;1.ltided\u00ab <\/p>\n<p>defendants 1 and 2 in their <\/p>\n<p>his own monetary lC)\u20acI&#039;1\u20ac\u00a7&#039;i&#039;{.,S.:&quot;v.&#039; Unvder._ &quot;the-.yla&#039;blove<\/p>\n<p>circumstances, the said a\ufb01&#039;10&#039;Vll&#039;nVV{&quot;._.iS liable7 to be<\/p>\n<p>recovered from the  _ll;vll.2VLl&#039;a11d 3. They<\/p>\n<p>are jointly an;i:l  l&#039;tCl.l&#039;pay the said<\/p>\n<p>anioumjlll of  inierest thereon at<br \/>\n20% froin*  realisation. The<\/p>\n<p>defeI&#039;l,4(M$.r1t.sll&quot;3._:VEiiid &quot;2  committed fraud and<\/p>\n<p>llllbreqiclh pf rt-r.List&quot;ori&quot;&quot;t.lhe plaintiff company and they<\/p>\n<p>&#039;are_.peirs&quot;oanalllVyliiiable to pay the said amounts. As<\/p>\n<p> the amount: due on the above<\/p>\n<p>f&quot;~.\u00ab.4_l&#039;a,ccou1itis Rs. 1 ,41,708.75.<\/p>\n<p>if  &#039;The defendants i and 2 acting in Collusion<\/p>\n<p>to have<\/p>\n<p>\\\\\/<\/p>\n<p>.\/<\/p>\n<p>wig&quot;\n<\/p>\n<p>nefarious dealings of the first defendant; Both the<br \/>\ndefendants 1 and 2 along with 4 and 5 are<br \/>\npersonally liable to nialie good this amount. As on<br \/>\n16.10.1992, the amounts found Clue l&#8217;rorV1V.1&#8217;f,:Mtf&#8217;li1.Ve<br \/>\ndefendants 4 and 5 was Rs.l9.353.50<br \/>\nthereon at. 20% pa. from that<br \/>\n31.03.1983 the amount due .3<br \/>\nRs.2l,l27.25. 3 3 3 3 3 3<\/p>\n<p>The defendants l andffiljfas  Director<br \/>\nand Chief ACcoL1nta&#8217;ni.__  gflziintillilffflCompany<br \/>\nought to have taken all-   safeguard<\/p>\n<p>the inaferesZ1&#8243;s.l[_.. offQV1h&#8217;e&#8217;=._&#8217; company to realise ihe<\/p>\n<p>\u00a3:111}OLif}l&#8217;fS.&#8217;.t&#8221;,flLlVt&#8217;.. &#8216;:.&#8217;o~.V&#8221;ii:fa&#8217;-,fi;_:&gt;111 its Consignors or<\/p>\n<p>ouston_1ers.&#8221;-. ffB,l.V1l~, Ad_ufe&#8221; to their negligence and<\/p>\n<p>V careleissness they have not taken necessary steps<\/p>\n<p> fo:Vr&#8217;eooE\\}lerjz..,Qf anioiinis due to the plaintiff before<\/p>\n<p>&#8216;ills f(:la&#8217;ini&#8217;l.,WaS&#8217;*&#8211; barred by lirniiaiion. A sum of<\/p>\n<p> due from one B.lbrahim of Bapel<\/p>\n<p>&#8211;VKu:1chi&#8221;\u00a7-T&#8217;&amp;er{:1a1a Post. Kerala. The Claim against<\/p>\n<p>u&#8217;~&#8211;hfim_for&#8221;ihe said amount was barred by limitation<\/p>\n<p>l\\\/<\/p>\n<p>V13&#8243;\n<\/p>\n<p>on O9,01.t982. There was another sum of<br \/>\nRs.5.113.T\/&#8221;5 due from one Kasturi Nayak. wife of<br \/>\nShantharama. Nayak of Nettanige Mudnur Village.<br \/>\nKavu Post. Puttur Taluk. The Claim<br \/>\namount. was barred by limitation on<br \/>\nThe defendants 1 and 2 otxghtado  <\/p>\n<p>appropriate legal action againgst.  SaatdV&#8221;pe&#8217;rVson:.:vaA<\/p>\n<p>before the claims were ttmte&#8217;\u00ab.barr&#8211;ed&#8217;.&#8217; Aft1ay&#8217;e_:n0Vt <\/p>\n<p>done so and the plaintiff ctonipany is.&#8217;\u00a7,~gt: to toss on<br \/>\naccount of their :&#8217;1.eg1ig_et1.j_ce.&#8221;&#8221;\u00bb._&#8217;pa_:*1&#8217;hereI&#8217;ore, the<br \/>\ndefendants 1 and  V1tai3_Ie..7_to&#8221;fp\ufb02ay the said<br \/>\namount with,  ozi _t.hjeV&#8221;  at 20% per<br \/>\nan11um:&#8221;&#8211;.t&#8217;r&#8217;orI1&#8242;  due dates. But the<\/p>\n<p>plaintiff &#8216;cornpany7._ota.i&#8217;I11s interest. on the said<\/p>\n<p>&#8211;&#8216;v.p_amc}&#8221;Ufl!f1t.:__f&#8217;E&#8217;1&#8217;on1AAG~4;.r___.}__&#8217;1v.1982 the date of 1&#8217;egts1&#8217;e1*ed<\/p>\n<p>.&#8221;..A11e.t&#8217;i&#8221;r;:Vep.&#8217;v__ASj.o&#8217;1&#8217;1.._31.03.1983 the amount. due on the<\/p>\n<p>a13.&#8221;o\\?L5  is Rs.&#8217;7.256\/~.\n<\/p>\n<p> Tdhe; defendants 1 and 2 ought to have<\/p>\n<p>&#8220;&#8216;p.dc.b&#8217;t.&#8211;at_Aned licence under the provisions of the<\/p>\n<p> .._K_arnataka Money Lenders Act. as the plaintiff<\/p>\n<p>ki\/.\n<\/p>\n<p>W14,<\/p>\n<p>company was advancing the loans to its<br \/>\nConsignors. The above t.ransaet.ions amounted to<\/p>\n<p>the business of lending monev Though the Said<\/p>\n<p>Act had Come into force in 1976 the dei&#8217;endan&#8221;t&#8211;s 1<br \/>\nand 2 did not apply for and take the 3<\/p>\n<p>licence under the provisions 01&#8242; the said <\/p>\n<p>did not possess money 1er1de1*s&#8221;Iioe&#8217;nc:e&lt;. Tii.e&quot;re_fodr&quot;e&#039; a7<\/p>\n<p>suit in o.s. No.e54\/1980 on 1.h&#039;e.. file of LilfiefM&#039;u\ufb01:.gi&#039;~if&quot;*&#8211;..<\/p>\n<p>Court, Mangalore again&#039;si\u00ab1r&#039;t.one&#039;._S&#039;i=i..}Gu1vndVVappa<br \/>\nGowda was disniissedday  The evlaim in<br \/>\nthe said suit was for Rs~,4.7&#039;7\u00bbT3.5&#039;3ViV.xtt1&#039;thiinterest and<\/p>\n<p>court: c.o&quot;s&#039;t:&#8230;_V&#039;7&#039;:h\u00e9j:::f:\u00a7&quot;ot.a\u00abE\u00bb&#039;*1.oss&quot;&quot;eaused to the Dlaintiff<br \/>\nConipany on &#039;a_ot:~:o:,initV&#039;Vo._{&quot;&#039;t,_he dismissal of the said<\/p>\n<p>suit wasi&quot;Rs;v5;2&#039;5$3.%8..;&#039;: And this amount was<\/p>\n<p>&quot;&#039;~,fK\u00a7ee;fV&#039;er?1.3,5l&#039;?. fron&#039;1~&#8211;&#8230;.1..}1e defendants 1 and 2 with<\/p>\n<p>&#039;=.inte&quot;r&#039;estv.._t&#039;tt&#039;,hereon at 20% per annum from<\/p>\n<p> date of dismissal of the said suit.\n<\/p>\n<p> on ~3d1&#8242;;03.I983 the amount due on that account<\/p>\n<p>  &#8220;is .R\u00a7&#8217;;~\u00ab_s,3 12\/&#8211;.\n<\/p>\n<p>_1L_<\/p>\n<p>The plaintiff eompany got issued a Iegai<br \/>\nnotice on 04.11.1982 to the defendants and also to<br \/>\none Sri.K.I'&#8221;I.Mohammed to whom aiso<br \/>\ndefendants 1 and 2 appear to have made<br \/>\nof large sums of money in the san1.e;&#8221;  V&#8217;<br \/>\nwithout the sanction of the :.E3&#8217;c)a.rd<br \/>\nThe defendants 1 and 2 1.0   <\/p>\n<p>would appear to have a1rea_d&#8217;y_ insV&#8217;ti.iu&#8217;!.ed.: in<\/p>\n<p>o.s_ No.41\/1981 on,&#8212;ihe ,Fi&#8217;ie&#8221;L_&#8221;oI&#8221;-\u00bb_ihe &#8220;cvmi Judge<br \/>\nCourt, Puiiur agaiI1St4&#8217;h#i.f&#8217;l&#8217;i.&#8221;:_I3i\u00a7&#8217;f\u20aci1&#8217;dElViiiS 1. 2. 4 and<br \/>\n5 have sent V firiiiioloieiidsivb&#8217;r&#8217;ep.ii&#8221;e:s,_ to &#8216;ytvvhe registered<br \/>\nnotice s   bu};\/::fi.:1&#8243;h e&#8217;&#8211; &#8212;  iI1&#8217;fi&#8221;{&#8220;&#8216;f&#8211;. &#8216; <\/p>\n<p>The &#8220;e_oia1I1\u00a7ofn,h  for the claims made<\/p>\n<p>against ilie\ufb01defelida&#8211;t1&#8217;t&#8217;s&#8221;Vl1ei&#8217;eir1 is fraud. breach of<\/p>\n<p>K&#8217;1sFUSv.t&#8217;..&#8221;&#8216;:~(T.;O_11I.l._SiOI1&#8217;Hgi&#8217;~\u00a3EVVCf riegiigenee and carelessness<\/p>\n<p> duties oi&#8217; the C1\u20ac&#8217;.f&#8217;\u20ac31&#8242;}daI11,S 1 and 2<\/p>\n<p>andVoihei*d.efendanis. AI} the above ti-arisaetions<\/p>\n<p>  are closely knit. together and prearrangement and<\/p>\n<p>&#8220;\u00a3.i:eVrefore the cause of action is common.<\/p>\n<p>&#8220;=..__&#8221;&#8221;Therei&#8217;ore. a common suit is fiied. Therefore. they<\/p>\n<p>kl\/A.\n<\/p>\n<p>&#8220;r16&#8221;\n<\/p>\n<p>sought for 21 decree for money in .21 sum of<br \/>\nRs.1T\/6.504\/&#8211;. Subsequently, plaint was amended<\/p>\n<p>and the claim was reduced to Rs.1.4l,7&#8217;08.75.<\/p>\n<p>4. After service of summons. the<br \/>\nentered appearance and filed a<br \/>\nstatement. contesting the<br \/>\nadmits that the he was<br \/>\nthe piainiiff company for  7  has<br \/>\nworked and disChaf:g~e_d   law.\n<\/p>\n<p>provisions of the  of<\/p>\n<p>Association  }:3_l21\u00a7in:tlil&#8221;f.&#8217;if-lo&#8217;n.1Vp_s;i1y and to the<\/p>\n<p>sat,isfa?r;tioinllllofy  of Directiors, honestly,<\/p>\n<p>c1i1igemi&#8217;y&#8230;_ &#8220;peas.\u00a2ri;;:ni&#8217;y.._:&#8217;:&#8221;aiid bonafide. keeping in<\/p>\n<p>View the belstAi1&#8243;1terestls of the Company. All his<\/p>\n<p>la&#8217;cit_s&#8217;i&#8221;\\iize?i*e either Vsl\u00e9ihcrticwiied and\/or ratified by the<\/p>\n<p>l\ufb02olarcli&#8217; Ihiring the said period, the<\/p>\n<p>com-pany Dhas shown great progress and<\/p>\n<p> &#8220;&lt;\u00ab_!&#039;LI1&#039;1}1)I&#039;O\\.f.E&#039;:Hl&#039;&quot;AI;:I\u20ac1&#039;1&#039;L. as is known to and adiliitted by all<\/p>\n<p> &quot;&#039;CQ&#039;n_ee::ned. The accounts were auclitecl and the<\/p>\n<p>&#039;lit&#8211;..\ufb02Ba?1ance Sheet was prepared regularly and as per<\/p>\n<p><span class=\"hidden_text\">-17-<\/span><\/p>\n<p>law. and all mat.t.e1*s were approved and accepted<\/p>\n<p>by the General Body.\n<\/p>\n<p>&#8216;The allegation in the plaint. that the<br \/>\nManaging Director had the power of g1&#8217;a11ti11gvVl&#8217;o:a\u00bb1is<br \/>\nonly upto Rs. \u00a3.OOO\/- and that without<br \/>\npermission of the Board of Di1*ectors_..V__hle::.<br \/>\npower to grant loans or to <\/p>\n<p>exceeding Rs. 1.000\/~ was deiiieii. <\/p>\n<p>The appointment oi&#8217;  Nlainahgiiig D}ii*ecto1*<br \/>\ndoes not disclose Vt.&#8217;hf\u00e9&#8221;_s&#8217;aici_v.lre..s;&#8217;t.ir.&#8217;ietions. The<\/p>\n<p>defendant reco.1lects_&#8230;si_lI&#8217;a.t&#8217;._Al&#8221;oi&#8221;&#8216;ll&#8221;&#8216;so&#8217;iiie&#8221;. years the<\/p>\n<p>authoiity   Director for the<br \/>\nsanct.ionuoi&#8217;&#8211;loans&#8217;:_was~.__ti~\u00bbi1limited as per guidelines.<\/p>\n<p>At any_  Valvl_i.he. trllansac\u00e9tions including loans<\/p>\n<p> place during the time the<\/p>\n<p>&#8216;r:leifeTnd..ai1_tfi,&#8221;w_a&#8221;s functioning as the Managing<\/p>\n<p>Direyctor  with the authority. sanction or<\/p>\n<p>&#8220;I&#8217;_&#8217;E1[ifiCK:&#8221;!l;lAf&#8217;_:_&#8217;1&#8217;l of the Board of Directors. The Board<\/p>\n<p>&#8216;~o&#8221;fVVD\u00bbirectors are not entitled to escape the<\/p>\n<p>&#8220;&#8221;&#8216;responsibilit&#8217;y for their actions and omissions. if<\/p>\n<p>u\ufb02any and are not entitled to point at others for the<\/p>\n<p>it<\/p>\n<p>i;gW<\/p>\n<p>the piaiiitiff is $E,i})pI&#8217;\u20acSSiI&#8217;1g documents iake at the<br \/>\nproper time. He suspects the genuineness of the<br \/>\ndocuments shown to the defendant. as the<br \/>\npromissory note executed by the 3&#8243;&#8216; C1(3f'(3I1(?1.&#8217;:v&#8217;1V1&#8243;.&#8217;.i:&#8221;&#8221;&gt;&#8217;.).I&#8217;i<br \/>\n27.6.1980. The suggestion in the<br \/>\nwas granted on 27.6.1980 to the<br \/>\nwithout sanction of the<br \/>\ncorrect. The defendant does<br \/>\ngranted any Cash loan  3&#8243;;  a<\/p>\n<p>sum of Rs.94,60O\/&#8211;y&#8221;~o_I1  i5i;i&#8217;rt&#8217;her the<\/p>\n<p>advances referred to inthe5p1_.ai&#8217;&#8211;n_&#8217;\u00e9V.v&#8221;said to have<\/p>\n<p>been made  3!}? C&#8217;3(f,rI3f311.{i&#8221;&#8216;c&#8217;1&#8217;i&#8217;:i~~1j.uCf\u00e9&#8221;Va1&#8217;iOuS dates<\/p>\n<p>wiihouzi thee{svaheiiio_n&#8217;\u00ab..o&#8217;_of  Board of Directors<br \/>\netc&#8230; is allegation that those<\/p>\n<p>U&#8217;aI1S;&#8217;&#8211;1C1;iOI1RS kepdfs away E&#8217;:-oni the Board of<\/p>\n<p>V.&#8221;DiI&#8217;e&#8217;.(&#8216;,if0iI_&#8221;S &#8220;is fai&#8217;s'&#8221;e&#8221;&#8216;;&#8221;V The aliegaiions that a sum of<\/p>\n<p> due from the 3&#8243;&#8216; defendant is not<\/p>\n<p>eorreici._.&#8221;.r&#8217;\u00a5._EiiV&#8217;a1iy rate. the 1*&#8217; defendant is not<\/p>\n<p>&#8216;V1_iab1e*~t.voA&#8217;;.Lhe piairitiff any amount. due from the 3?&#8221;<\/p>\n<p> for any of the reasons alleged in the<\/p>\n<p>&#8220;\u00b0p1Vaini.. 3&#8243;&#8216; defendant: P.B.Andunhi would transact<\/p>\n<p>Win other names also. This defendant reeoileets<\/p>\n<p><span class=\"hidden_text\">-20-<\/span><\/p>\n<p>that on 27.6.1980. the amounts were due to the<br \/>\nplaintiff from the 3&#8243;-3 defendant taking into<br \/>\naccount. aiso the liability in respect Ol&#8217;O&#8217;t1&#8217;l\u20aci&#8217;I&#8221;lE1&#8217;__I&#8217;I&#8217;1\u20acS<br \/>\ntransacted by them. adjustment entries<br \/>\non that date and documents are taken<br \/>\ndefendant. for the balance amo__u.nt__for&#8221;tlhef&#8217;_p.ti&#8217;r:p&#8217;oesecu<br \/>\nof security and conveniencei\ufb02\u00e9otfirecftJ\\le~ry,&#8217;:&#8221;a&#8221;ft&#8217;\u00a2e&#8221;;..:<br \/>\nreceiving some Cash fron\u00e9:_&#8221;i.,he<br \/>\nAnduhni. This was done   Sri<br \/>\nNarasimha Sastry   found it<br \/>\ndesirable in the. inteirest.  Company.<br \/>\nThe .:li\\{a\ufb01.lfVJ5iV&#8221;?il&#8217;n&#8217;ii&#8221;&#8216;:breach of trust<br \/>\nare  are not furnished.\n<\/p>\n<p>&#8216;I&#8217;h.erefodre._&#8221;  do not amount to a<\/p>\n<p>proper This defendant is not able<\/p>\n<p>.._to r..e\u00a7coli~ect the&#8217; transactions with defendants 4<\/p>\n<p>&#8216;a&#8217;f1dV.Vd&#8221;&#8216;5,EV&#8221;ihVVeA~.&#8217;nature of the transaction and the<\/p>\n<p>~i1&#8243;ansactions. This defendant is not<\/p>\n<p>\u00abt_i_i.e&#8217;a&#8217;rnot1nts due from defendants 3 and 4<\/p>\n<p>to the p_lai.ntiff. The other t1&#8217;ansact.ions referred to<\/p>\n<p> ~w__V&#8217;are also\u00e9ienied. At any rate. this defendant is not<\/p>\n<p>t.o pay the said amount. The defendant. is<\/p>\n<p>M  <\/p>\n<p>,2]-\n<\/p>\n<p>not in a position to say whether the license under<br \/>\nthe Money Lenders Act was required or not. The<br \/>\nplainiifl&#8217;&#8211;Cornpany had iawyers for giving the<br \/>\nadvices and if advice is not got on what dot?ti.nie:ni{_s<br \/>\nhave to be taken regarding the Money<br \/>\nthis defendant is not iiablem<br \/>\nHowever. he reeollects the .l<br \/>\nlicense were aiso being n&#8217;1a_de l&#8221;i*.o;ln1 time<br \/>\nHe do not recollect. urhalllvlvllhaiabened. tlielllsuit<br \/>\nmentioned in Pai*ag!&#8217;a_&#8217;pyh  lhe suit<br \/>\nis dismissed on  the<\/p>\n<p>resignation Qf4l.&#8217;lfie&#8217;  dei&#8217;e&#8217;:11d&#8217;aA.ni&#8217;.&#8221;.&#8217;uflfhe suit eiaim is<\/p>\n<p>barredzvlby i&#8217;ir:ili_i.at:i.o11_.&#8217;lV.The eiaim is also barred by<br \/>\nthe principles&#8217; waiver. acquiescence.<\/p>\n<p>All theyEran&#8217;sac:t.io11s.that have taken place during<\/p>\n<p>\u00abgs  &#8220;&#8221; &#8220;i&#8217;Vlar1ag,.;ii&#8217;ig [Director has been<\/p>\n<p>l&#8217;s_aVi;et&#8217;ia.o:r1ed-_l&#8221;appropriate and ratified and are done<\/p>\n<p>with lproperiailluthoriiy as required.<\/p>\n<p> &#8220;defendant. W Sri ii Govinda Rao also has<\/p>\n<p>l-_i&#8217;i&#8221;l_e&#8217;c.i~a separate siatemeiit. Some of the members<\/p>\n<p>it &#8220;o.f7ihe Board of Directors wanted to make wrongful<\/p>\n<p>lye<\/p>\n<p>Wggw<\/p>\n<p>gain of the funds of the Company which this<br \/>\ndefendant was opposing and so only to wreck<br \/>\nVengeance he was placed under suspension since<br \/>\n19.10.1982, an enquiry was ordered by i&#8217;ra.n&#8217;1&#8211;.ing<br \/>\ncharges and that made this defendanr<br \/>\nfrom the post in which he was \\x!o1&#8217;kingi_f\u20ac:<br \/>\nadditionai harassment, the pr&#8217;e&#8217;seni:&amp;_<br \/>\nfried and this defendant was  <\/p>\n<p>This defendant joined the_VL4&#8243;&#8221;p_1;&#8211;1i11.Viifi&#8221;  11<br \/>\nVyavasaya Varihaka,&#8217;Sangiha&#8230;&#8221;L_Lifni.i,ed  cierk in<br \/>\nthe year 1956.   as Chief<\/p>\n<p>Accountant o_r1&#8217;1y  which<\/p>\n<p>appoin;\u00a3meni.Av(was7&#8242;;eoni&#8217;i.rmed in the next year. No<br \/>\nspecific7duties*werebg-iy&#8217;e.1J.=&#8217;to him. He was also not<\/p>\n<p>served witxirydaoytr_eso&#8217;1u.._i&#8217;iion passed by the Board of&#8221;<\/p>\n<p>_ Direcitovrs. Theyuappointment order only indicates<\/p>\n<p>  he .ew.a&#8221;s&#8211;._V responsible For keeping i,ipwto~date<\/p>\n<p>a-Ceo-11ni.s&#8221;~._aiid._.i:o act  per the direction of the<\/p>\n<p>Managinvg.ttijiirzector. Therefore. all aiiegations in<\/p>\n<p>fthe p1ai'&#8221;n.ci&#8217;. contrary to the said facts was denied.<\/p>\n<p> .i}..8.4[:1970. when his duties were Iaid down in<\/p>\n<p>1&#8242; &#8221;~7.1.I&#8221;.1t3v._()1&#8242;:&#8217;-&#8216;(l1(:,&#8217;I&#8217;._ he was not the ChiefA(&#8216;couI11iant. The<\/p>\n<p>.5<\/p>\n<p>W24.&#8221;\n<\/p>\n<p>docunients which the plaintiff is relying on in the<br \/>\nplaint. He is not in a position to recognise as to<br \/>\nwhich were the doetimenis referred to in the<br \/>\nDlaint. He denies the iosses to the tune&#8221;&#8211;.yof<br \/>\nRs.94.600\/&#8211; as set&#8211;out in the plaint.<br \/>\nliable to pay the aforesaid aI}&#8217;iOL1I1lS.W<br \/>\nbeen no fraud as alleged niu(:h<br \/>\ntrust. To the best of<br \/>\ndefendant. accounts were<br \/>\nwere drawn. advanoesx ha.}.\u00bb&#8221;e&#8221; or by<br \/>\nratification by the  _.He has also<\/p>\n<p>denied the paiigavgraphs. It is<\/p>\n<p>not hisgdulvtly&#8221;t,5o,  license tinder the Money<br \/>\nLendersl&#8217;Act. if.thVe_fbd&#8211;e:e&#8217;i\u00abs~io11 has gone against the<\/p>\n<p>cornpany. it&#8221; is it&#8217;.o&#8211;i&#8217; &#8216;i.he&#8217;:Con&#8217;ipany to challenge the<\/p>\n<p>lV&#8217;s.aid&#8217;-ijlucl&#8212;gnment. l&#8217;i&#8217;i&#8221;i&#8217;el defeiidant has not advanced<\/p>\n<p>&#8216;a_n&#8217;y_&#8221;ino*ney&#8221;&#8216;..fio~&#8221; anybody rnuch less the person<\/p>\n<p>nalmeld in.lblai&#8217;:;agra13h 7. The suit is bad for non-<\/p>\n<p> joinder and mis&#8211;joinder of Cause of action. The<\/p>\n<p>&#8216;~p&#8217;lailnt\u00abii&#8217;f&#8217;s eiairn is barred by principles of estoppel<\/p>\n<p>&#8220;&#8221;an\\;:l waiver. The suit is frivolous and therefore. he<\/p>\n<p>ll\ufb01sotlght for dismissal of the suit. <\/p>\n<p>-25&#8243;\n<\/p>\n<p>6. 3&#8243;&#8221; defendant&#8217; also has tiied a detailed written<br \/>\nstatement. He has categorically admitted that he<br \/>\nhas been dealing with the plaintiE&#8221;f\/Conipany for<br \/>\nmany years past and has consigned &amp;11&#8217;1&#8217;21C1{an~7t&#8217;:t&#8217;t&#8217;.7tO<br \/>\nthe plailqtiff on many occasions. It is<br \/>\non 27.6.1980 this defendant<br \/>\nof Rs.9-4600\/~ from the ptadi\u00bbitt&#8217;i&#8217;1&#8217;E7<br \/>\nwaybtil 11078398. It is<br \/>\neottuded with     of<br \/>\nthem. The avern&#8217;ie;31_s ma&#8217;deivi_:&#8217;:t.ti&#8217;a_t. t.h\u00abe&#8217;1*&#8217;e i&#8221;&#8216;\\V2\u00a7\\\/as no<br \/>\nconsigning of areka   defendant<\/p>\n<p>is not aware a:-:-_te\u00bb_ what&#8217;  o,r&#8221;iS&#8211;..i10iIrecorded in the<\/p>\n<p>i&#8217;egiste,i&#8221; 0f&#8217;th;&#8217;e_V 1)1?air1.t&#8217;i&#8217;tf&amp;t&#8217;. it  not true that some<br \/>\nmore ad.va\u00abneeisVi&#8217;ittcttie-~._tVtCvbt;&#8217;ained by the defendant<\/p>\n<p>S1,1bSeq_Vt1e1it&#8221;tyV.V&#8217; .ff;hiAs_ d&#8221;&#8216;efendant decided to go and<\/p>\n<p>d_&#8217;0.:\\N}_1AiI1&#8243;B()&#8221;\ufb01ib\u20acly. Hence. on 5.7.1982. this<\/p>\n<p>&#8216;_dpeV1&#8217;*s0na11y went to the office of the<\/p>\n<p>platintiit a&#8217;n&#8217;jdf:paid the entire amount. amounting to<\/p>\n<p>?igs.1_&#8217;2..3&#8243;&#8216;;22&#8217;5.00 and the promote dated 27.6.1980<\/p>\n<p>f\u00a7&#8217;:1r1di&#8221;&#8216;QAther eonneeted,doeuinents were returned to<\/p>\n<p> 1*&#8221; defendant had by then left&#8221; the<\/p>\n<p>7.:ntaiiitiff\/eonipany. This defendant. paid the<\/p>\n<p>-25..\n<\/p>\n<p>aforesaid amount. into the hands of A<br \/>\nGopalalwishna Bhat who was the manager<br \/>\nincharge of the plaintiff. The said A<\/p>\n<p>Gopalakrishna Bhat also said that he \\PVOL1l&#8217;Cl..VV&#8217;t?3.&#8221;(&#8216;i&#8217;2&gt;17\\.V_Ci<\/p>\n<p>a receipt for the amount. paid in a<br \/>\nOn 9.7.1982, this defendant w-rote a_.le\u00bbt.,t&#8217;:e~1&#8243;V&#8221;t..o \u00ab.t.l&#8217;1e&#8217;u  4<br \/>\nsaid Manager incharge requesting&#8230;l11rtt\u00ab._t&#8221;:o_&#8217;<\/p>\n<p>receipt. by registered post; Thei:\u00a2&#8221;was  to <\/p>\n<p>that letter. He did not pttrsiie&#8217; the lrii-after since he<br \/>\nwas busy making pr&#8217;e__p&#8221;a1&#8243;at:iohs&#8221; t&#8221;o.go to Bombay. If<br \/>\nthe plaintiff has produ&#8217;Ced.&#8217;V_a{1y:&#8217;~p.i&#8221;o&#8217;t1o.te to be the<br \/>\none execL1t.eci&#8221;&#8216;t}y.&#8217; tliiisid\u00e9f\u00e9ndefI11..s._V:&#8217;ll is a forged<br \/>\ndocument.&#8221;i&#8221;v{TVhe7t&#8217;sL1.&lt;i&#039;t&#039;\u00ab&#8230;&quot;is  for non-joihder of<\/p>\n<p>necessary pa1&#039;tiVes.;&quot;._ <\/p>\n<p>7. Defehclaivtts 5 also filed a detailed<\/p>\n<p>&#8216;*,_wI&#8221;itfter1:sLatem&#8221;e&#8217;n.t._,____.The SEi11(&#8216;,l&#8217;.lOl1 of Rs.30.000\/&#8211; on<\/p>\n<p>V&#8221;._q,2\/L12.1.98(3.._o&#8217;r___on the earlier dated 2.l2. 1980 in a<\/p>\n<p> as alleged in the plaiiit were<\/p>\n<p>&#8216;Vdenierl.&#8221;&#8216;.a All the borrowiiigs were made by these<br \/>\nifdefe-iidaVrit,s on executing necessary records. It is<\/p>\n<p> &#8216;denied that&#8217;. these defendants :~;21&#8243;e liable to pay<\/p>\n<p>ll\/i<\/p>\n<p><span class=\"hidden_text\">(6)<\/span><\/p>\n<p>_28_<br \/>\nthe dei&#8217;enda1&#8217;1ts 4 and 5<br \/>\nthe<\/p>\n<p>what amount?\n<\/p>\n<p>Whether<\/p>\n<p>owed to plaintiffs any and<\/p>\n<p>Whethex&#8221; any or both<\/p>\n<p>defendants<\/p>\n<p>along with other defeI1dants._ &#8216; tho&#8217;-,x&#8221;<br \/>\nmake good the amounts 1&#8242;(s&#8217;u1&#8217;1&#8243;d*.ft\u00bbOhh&#8221;<br \/>\nbe due from the Ci,F51&#8217;6;\ufb02d\u00a71h&#8217;1\/5&#8242;<\/p>\n<p>and 5 and if so. what &#8220;a_ni&#8211;ounts?; &#8216; \u00b0<\/p>\n<p>Whether the SLiitHx&#8221;i_t&#8221;&gt;a;V niigs<\/p>\n<p>joinder 0f.ea.usesh&#8217; of sajetji&#8217;0.n&#8217;?<\/p>\n<p>Whether t.h_e &#8216; fV1\u00a7~&#8211;. &#8220;b~i::;V::r7-ed by<br \/>\n11n1:.:t&#8217;91._ti:&#8217;on?I_ N h &#8216;V V<\/p>\n<p> &#8220;the  Claimed are<\/p>\n<p>principles<\/p>\n<p> st opp e i&#8221;  agai&#8217;i.ye 1* 21 n d 21 C&#8217;. q U ie scene e&#8217;?<\/p>\n<p> Vvere negligent in pe1&#8217;i&#8221;01&#8217;manee of<\/p>\n<p>Whe&#8217;t~he:&#8217;  defendantis 1 and 2<\/p>\n<p> duties in not applying for<\/p>\n<p> not obtaining license under<\/p>\n<p>&#8216;fie money lender Act&#8217;?\n<\/p>\n<p>Whether the defendants 1 and 2<\/p>\n<p>are liable to pay to the<\/p>\n<p>the amount lost to it on accotlnt of<\/p>\n<p>the dismissal of the suit ()5<\/p>\n<p>the<\/p>\n<p>1 and 2 are <\/p>\n<p>of<\/p>\n<p>;:)lamtiff<\/p>\n<p>-29.&#8221;\n<\/p>\n<p>N654\/\u00a3980? And if so. what is the<\/p>\n<p>extent of their liability&#8217;?\n<\/p>\n<p>(13) What relief&#8217;?\n<\/p>\n<p>9. The claim against. defendants 4 and<br \/>\ngiven up. To substantiate the claim of<br \/>\n1 to 3. plaintiff examined a_;\u00bbSS_B<br \/>\naddition. they have produced<br \/>\nare marked as Ex.P.1    <\/p>\n<p>defendants. no evidence wa_s..ad.d&#8217;u_ced.l  <\/p>\n<p>10. The trial  1-_alfj&#8217;p_re&#8217;c&#8217;ilalion of the<\/p>\n<p>aforesaiidl&#8221;o&#8217;rf.ali.anddoceu&#8217;-menla&#8217;*i&#8217;y evidence on record<br \/>\nheld the lp_lalinili~ff1&#8217;s &#8216;a_reA..\u00bbp_r:operly represented: The<\/p>\n<p>plaintiff  esi.a_bAl&#8217;i_vsli.,e1d that the loan granted to<\/p>\n<p> defendallfitwas unauthorised: 3&#8243;&#8216; defendant<\/p>\n<p>lfowelili.io._l&#8217;L&#8217;h;e\u00bb. jp1..ainiiff&#8217; in a sum of Rs.1.41.708.50\/&#8211;<\/p>\n<p>as .Cli&#8217;ain1etll&#8217;r:&#8217;j_iln&#8217;lhe plaini; The case of fraud. breach<\/p>\n<p>Cof  falsificaiion of accounts alleged in the<\/p>\n<p>..fpfa&#8217;il1&#8217;i.fL is not established. The claim against<\/p>\n<p>&#8216;edl\u00e9lfendants 4 and 5 was not pressed. Both<\/p>\n<p>l&#8221;,VHdefe1ida11i.s l and 2 are liable along wiih other<\/p>\n<p>&#8216;LL\/,_<\/p>\n<p>-31&#8243;\n<\/p>\n<p>an audit report. the findings recorded by the trial<br \/>\nCourt; is vitiated.\n<\/p>\n<p>Thirdly, it was contended the Managing<\/p>\n<p>Director cannot be held personally liable ifflany<\/p>\n<p>one of the customer has not repaid V.<br \/>\namount. When once the plea of fraud islli:..egai\u00e9.iiled&#8217;.-..l<br \/>\nwhen 8&#8243;? defendant &#8212; the cnstorner&#8217;iszal;soV:&#8221;a_\u00a7a&#8217;r&#8217;t:y&#8221;1<\/p>\n<p>to the proceedings, it&#8217; is _operi?_to&#8221;,_t.he <\/p>\n<p>recover from the 3rd de[&#8216;e&#8217;11r.d&#8217;ant t.h\u00abels.a_&#8221;1_;d &#8216;*=a\ufb01n&#8221;oum<br \/>\nand there was no ol\u00a33~li.giit,iO&#8221;n &#8216;oil til&#8217;? Darlt&#8217;*of&#8221;lthe ls&#8217;<br \/>\ndefendant. to Clear the said\u00bbVan1o_ni&#8217;nft&#8230;.and therefore,<\/p>\n<p>he Cont,e1ided,\u00abs:ee_11  the judgment<\/p>\n<p>and dectre-el  requires to be set\u00bb<\/p>\n<p>aside. PlerullVcolntr&#8217;a.&#8221;diiearned counsel for the<\/p>\n<p>1*espo{nder1ts &#8216;supported the impugned judgment<\/p>\n<p> &#8216;<br \/>\n lr1._t*l&lt;1.e&quot;  of the facts and rival eoritentions,<\/p>\n<p>t.he&#039;-.followihL.g points arise for Consideration in this<\/p>\n<p><span class=\"hidden_text\">-32-<\/span><\/p>\n<p>(1) Whether the 1*&#8217; and 2*&#8221; defendants<br \/>\nare liable to pay the money due<br \/>\nfrom the 3&#8243;-&#8216; defendant to the<\/p>\n<p>plaintiff as held by the trial Court?<\/p>\n<p>{2} Whether the suit filed without <\/p>\n<p>report was maintainable&#8217;?\n<\/p>\n<p>{3} When a case of fraud, <\/p>\n<p>trust is held t.o be<br \/>\nis the 1~&#8221;*&#8217;- defendant liabletlo pa&#8217;3(it~he\u00ab. it<br \/>\nsuit claim? T A it <\/p>\n<p>l3. Po1&#8217;ntNo.1<br \/>\nThe material  re.eord&#8217; &#8216;\u00abdi.s&#8217;\u20ac\u00bb1Aoses H that the<br \/>\nplaintiff is a V PriVa_te:&#8217; &#8216;(l3:._on=l1par1y. 1.9&#8217;<\/p>\n<p>defenda,nt.* was&#8221;apL\u00a7)oi&#8217;i&#8217;iit.e&#8217;das a l\\\/Ianaging Director<\/p>\n<p>of the saidltColi;1;5a.n&#8217;yA;} At. the relevant point of<\/p>\n<p> time;\u00a7OO to<\/p>\n<p>]L\/..\n<\/p>\n<p>&#8220;33-\n<\/p>\n<p>the 3}&#8221; defendant. &#8212; a customer of t.he plaintiff on<br \/>\nhis supplying 100 C[i.iiI&#8217;lEalS of arraclsianut. The<\/p>\n<p>material on record discloses apart from ___the<\/p>\n<p>aforesaid transactions on severai OCCElSlOF}&#8221;S~.,i&#8221;&#8216;.3&#8243;&#8221;&#8216;j<\/p>\n<p>defendant has been paid money by <\/p>\n<p>The specific case pleaded by _t_h,e__pla&#8211;in&#8217;tl&#8217;i&#8217;ill&#8221;_&#8217;:is&#8221;=that.v&#8217;<\/p>\n<p>the mana\u00e9iing director was 7&#8211;_not&#8221;A.&#8217;\u00e9iiithOrise&#8221;d&#8221;*~..,4t&#8217;tc-.i_A<\/p>\n<p>advance any sum in exeess=.__of<br \/>\nthe prior approval oi&#8217; the Boa-1f:d-.yot&#8217; D&#8217;iitel_c&#8217;torVS. The<\/p>\n<p>present transaction &#8216;=,\\i&#8217;as&#8217;._ 1:&#8217;_eve&#8217;*r_'&lt;.brought to the<br \/>\nnotice of the Board asst-v,n&#039;ec:e.sspa1?y&#039;.enii&#039;:&#039;ies were not<\/p>\n<p>made in the .()l&#039;. a:&#039;eeotin.ts&#039; niaiiitained by the<\/p>\n<p>Company aindbihe&quot;i_ei1pt&#039;.i&#039;ije eorn\ufb02pany was managed by<br \/>\ndei&quot;enda&quot;nts._ ll  was never brought<\/p>\n<p>to the nVot&#039;._&#039;icr:: of Alil\ufb01\u20acTj_.&quot;&#039;b0E1I&#039;Cl. On 3.3.1982. 1*&quot;<\/p>\n<p>defengjdant resigned.&quot; Subsequently, 2&quot;&quot; defendant<\/p>\n<p>a&#039;lso&quot; It is on their resignations. when<\/p>\n<p>1a.ceo1li1.tTs.._pwere}. checked, then they found these<\/p>\n<p> comrnitted by defendants 1 and 2.\n<\/p>\n<p>fptnimedyiaijeely. a legal notice was issued. The books<\/p>\n<p>fof&#8217; &#8216;a~c;count.s maintained in the plaintiffwcompany<\/p>\n<p>.&#8217;j_.d&#8221;ob&#8221;i&#8217;1:ot disclose the receipt of 100 bags of<\/p>\n<p>_34w<\/p>\n<p>araekanut on the basis of which the amount was<br \/>\ntent to the 3&#8243;-&#8216; defendant. The evidence on record<br \/>\ndiscloses that. 15&gt;&#8217; defendant was not authorised to<br \/>\nmake any payment without. securing prope1ft,yjrfo.r<br \/>\nthe due repayment. The procedure<br \/>\nwhenever a payment is made under <\/p>\n<p>on the backside of the debit1;.&#8221;&#8221;t_j}_1e <\/p>\n<p>secured as a security_.Vi7,..&#8221;&#8211;.t&#8221;he ag_1iic&#8217;u\u00b0itti;r&#8217;avlV<\/p>\n<p>produces is clearly n1ent.io&#8217;ne&#8217;d. T&#8217;h._ereafte~r,&#8221;that.<\/p>\n<p>product is taken in.t&#8221;o~.,.aceotirit;i&#8217;i&#8217;on1 thv-e&#8221;c&#8217;ornpany<br \/>\nby making appropriate e&#8217;nt:rie.s1&#8243;-find&#8217;*__the inward<\/p>\n<p>register and  sable 1.0}?  ajprodticts. after<\/p>\n<p>adjusttVnent&#8217;,i&#8217;\u00abithe  wasvdwrioriilaily discharged.<\/p>\n<p>As aforesaid. &#8216;if&#8221;a*ny&lt;.__Ir;\u00bboney is tent in excess of<\/p>\n<p>Rs.10(_3O\/.d&#039;&quot;E31&#039;i&#039;o.Fi-.Pe&#8211;1&#039;bm~.i&quot;ssion of the Board was a<\/p>\n<p>&quot;&#039;.&quot;mLES&quot;E&#039;:\u00ab:. _in fac&quot;t);\u00ab___1_,__h\u00a2e documents produced in the<\/p>\n<p> c;:Aa&#039;e.e&quot;as&#039;:&#039;  pointed by the trial Judge. all the<\/p>\n<p>r&#039;es&#039;o&#039;_iut.&#039;i&#039;o&quot;1*:s.t&quot;a&#039;i&#039;e in handwriting of the 15&#039;<\/p>\n<p>defe-.nda.n~i._d&#039;&lt;j&#039;..&#8211;Ai it does not disclose that this<\/p>\n<p>&quot;.t&#039;ra11sa~ct&#039;i;.on was brought to the notice of the board<\/p>\n<p> any point&#039; 01&#039; time. in fact. in the written<\/p>\n<p>&#8211;if.&#8211;st&#8211;at&#8217;eArI1ent&#8217;. the 1*&#8221; dC&#8217;f\u20acIld\u00a3-111E. pleads ignorance<\/p>\n<p>\\\\\/.\n<\/p>\n<\/p>\n<p>-35,<\/p>\n<p>document produced and marked in the case<br \/>\nshowing that there was a debit note for 100 bags<br \/>\nof arrackanut do not represent. a genuine<br \/>\ntransaction. It is in this background<br \/>\nis to be appreciated. But. none of the  V&#8217;<br \/>\nhave entered into the<br \/>\ncontent by cross examining<br \/>\nthe Company. His  &#8220;ho<br \/>\nassistance in provin_sg.the  but<br \/>\nthrough him they  documents<br \/>\nmaintained   &#8216;business by<br \/>\nthe piainiti&#8217;\u00a7:i&#8221;,(__b&#8217;an&#8217;.i;Iilihtetdsttttdddtproduced the<br \/>\nmemor;an&#8217;dVnt1ntV5\u00bbv&#8217;_V  01&#8242; association.<\/p>\n<p>promissory note by the 3*&#8221; defendant at<\/p>\n<p>the tirne  Rs.9-4,600\/m. He has<\/p>\n<p>V.&#8221;{)_I&#8217;OC&#8217;&#8230;1.i:'(?f;&#8217;CA1 L?aAbOL1i.'&#8221;2&#8217;G&#8217;vd\u00a3?biI notes showing that 3*&#8221;-<\/p>\n<p>&#8220;&#8216;~ae&#8217;;&#8217;e_n&#8217;d\u00e9.-mi.t;\\:;1s-. a regular customer to whom the<\/p>\n<p>arrtohtintsytwicrle paid and in the back side of the<\/p>\n<p>&#8220;said debit notes, there is no ment.ion about any<\/p>\n<p>&#8216;=_secLi&#8217;rity having been taken from him. The account<\/p>\n<p>ibogoks produced in the case shows either on<\/p>\n<p> 27.6.1980 or on other dates. there is any entry in<\/p>\n<p>via<\/p>\n<p>l in I&#8217; t. ii. .\n<\/p>\n<p>_38i<\/p>\n<p>has failed to perform his statutory obligations. It<br \/>\nis not only one transaction. There are more than<br \/>\n20 transactions where money has been paid tov&#8217;&#8211;t_he<\/p>\n<p>3&#8243;&#8216; defendant contrary to the proced.ure.7i&#8221;-Ttfhe-.,<\/p>\n<p>accountant who was in employment  it<\/p>\n<p>who has been given p1&#8217;on1otion:-&#8216;aihd.yatithve:Ai;ele:vva:ntx&#8217;v..<br \/>\npoint oi&#8217; time who was the<br \/>\nfailed to bring it to the<br \/>\nand directors about,these&#8212;&#8211;iljrregiilaritjievsy.He is<br \/>\nalso a party to this&#8221;  In fact, the<br \/>\ndisciplinary pr&#8217;oce_edi:n&#8221;gVs&#8217;weVi*e._l:i.iiV.litli&#8217;.a.i:\u00abe&#8217;\u00bbdllagainst him<\/p>\n<p>and therea &#8220;terI__*.&#8217;_ it  __ was  ilwithdrawn on his<\/p>\n<p>resignat.ionl&#8217;.&#8221;&#8216;\u20ac5&#8217;VRig:htlyghe  not challenged the<br \/>\nsaid order.&#8221; He.al:_ls.o&#8221;&#8216;d__i\u00e9:i.not step into the witness<\/p>\n<p>box to _subslta_i1tia&#8217;&#8211;i.e&#8221;pthlell defences which he has put<\/p>\n<p>  Invv.:&#8217;t\u00abVhesje._}e.ircumstances. we are of the View<\/p>\n<p>_  that-..__thev~fivnsdlings recorded by the trial Court that<\/p>\n<p> .4&#8243;-__VVI&#8221;&#8216;iQ[r or1ly__l&#8217;the 3?&#8221; defendant is liable to pay the said<\/p>\n<p>4&#8243;7&#8243;c?..__II&#8217;if.,)_L1l.f1&#8242;[, even defendants l and 2 because of<\/p>\n<p> _la__\u00a7)ses. latches. negligence in discharging their<\/p>\n<p>\u00a239\u00ab~<\/p>\n<p>dues in unauthorisedly tending money to the 3&#8243;&#8221;<br \/>\ndefendant. We do not  any jtistificatioii to<br \/>\ninterfere with the well considered order passed by<br \/>\nthe triai Court holding that all of them are liable<\/p>\n<p>to pay the said amount.\n<\/p>\n<p>14. Point No.2<\/p>\n<p>It is a fact that audit report<br \/>\nbefore the Court. The suit .d<br \/>\nreport. The suit is  o&#8221;n_h&#8221;t.he<br \/>\nshowing the payment to  Debit<br \/>\nnotes are  &#8220;Hdisputed.\n<\/p>\n<p>Promisisory  i&#8217;s&#8221;~._pr_o_dueed which is not<br \/>\ndisputed&#8217;.. TheVae&#8211;eo&#8217;u__n&#8217;t'&#8221;.books are produced to<\/p>\n<p>showjvtihpat   araekanut for which this<\/p>\n<p>&#8216;a&#8217;rno&#8217;uni.7*vtfas adtfaneed was never taken into<\/p>\n<p> plaintiff and above all the 3&#8243;&#8221;\n<\/p>\n<p>defe..ndan~tradlrnitted the transaction and he pleads<\/p>\n<p>x&#8221;i\u00ab___V&#8217;diseha&#8217;rVgAe and he has failed to establish the plea<\/p>\n<p> &#8220;o_iVd_is&#8221;;eharge. Under these eiretiinstanees. the trial<\/p>\n<p>  Cdurt was justified in ignoring the fact though no<\/p>\n<p>&#8220;audit: report was produced. as the ease was based<\/p>\n<p>\\\/<\/p>\n<p>-41&#8243;\n<\/p>\n<p>to the Claim made by the plaintiff independent. of<\/p>\n<p>fraud and breach of trust. When the plaintiff has<\/p>\n<p>established his Claim. the trial Court. was ju\ufb01s..tV_i&#8217;-{died<\/p>\n<p>in Coming to the said Conclusion. We dQ:__1;iOf :&#8221;~S_\u20ac&#8217;\u20ac__x&#8217;_<\/p>\n<p>any merit in this appeal. Accsif\u00bbdiz1g1},&#8221;.&#8221;&#8221;ti*{:e..V\u00e9igjp-eaiy\u00e9 <\/p>\n<p>is dismissed. Parties to bear t1f1\u20aci\u00a7,&#8221;&#8216;&#8211;Qtk\\&#8217;Ii=,CO.SV&#8217;L&#8217;S_&#8217;~~U,,,,_ <\/p>\n<p>AH8 \/ bnj:<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Karnataka High Court G Shyama Bhat S\/O Ishwara Bhat vs Karnataka Vyavasaya Varthaka &#8230; on 7 December, 2009 Author: N.Kumar And C.R.Kumaraswamy M1- IN THE HIGH COURT OF KARNATAKA AT BANGALORE IDATED THIS THE 7&#8243;&#8221; DAY OF IDECECMBFCR. 2009 PRESENT THE I&#8221;iON&#8217;BLE3 MR.\u00ab-JUSTICE N.KUM.AR AND THE HONBLE2 MRJUSTICE C.ra.KuMARAS.&#8211;ii2\\}&#8217;A;$\/i\ufb01ff&#8217; REGULAR FIRST APPEAL Ns;3.1.ioif.\u00e9d4O&#8217;i&#8217;7; \u00bb&#8217; BETVVEEN [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,20],"tags":[],"class_list":["post-189180","post","type-post","status-publish","format-standard","hentry","category-high-court","category-karnataka-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>G Shyama Bhat S\/O Ishwara Bhat vs Karnataka Vyavasaya Varthaka ... on 7 December, 2009 - Free Judgements of Supreme Court &amp; 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