Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos. 77507751 of 2021
(Arising out of Special Leave Petition (C) Nos.1255812559 of 2018)
ANITA RANI ... Appellant (s)
Versus
ASHOK KUMAR & ORS. ... Respondent(s)
J U D G M E N T
V. Ramasubramanian, J.
1. Leave granted.
2. The two money suits filed by her having been dismissed by the
trial Court, but decreed by the First Appellate Court and the
decrees so passed by the First Appellate Court having been
reversed by the High Court in two second appeals, the plaintiff
Signature Not Verified
appellant is back to square one and is before us in the above
Digitally signed by
Jayant Kumar Arora
Date: 2021.12.16
16:27:16 IST
Reason:
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appeals.
3. We have heard Shri Rajiv Bhalla, learned counsel for the
appellant and Shri Nidhesh Gupta, learned senior counsel for the
respondents.
4. The appellant herein filed two suits in Civil Suits No.15643
and 15592 of 2007 against the respondents herein, on the file of
the Court of the Civil Judge (Junior Division), Chandigarh, for
recovery of a sum of Rs.10,48,000/ in the first suit; and a
(i) (ii)
sum of Rs.67,31,000/ in the second suit. The averments in the
first suit were as follows: that the second respondent herein is
(i)
the sister of the appellant’s husband; that the first respondent
(ii)
is the husband and the third respondent herein is the son of
respondent No.2; that the respondents herein (defendants in
(iii)
the suit) were carrying on the business of dealing in building
materials under the name and style of Prem Chand Amar Chand;
that the appellant and her son are having a joint account in
(iv)
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ICICI Bank, Sector9, Chandigarh, where the respondents also
maintain an account; (v) that the respondents borrowed a sum of
Rs.10,50,000/from the appellant on 18.11.2003, by way of a
cheque; (vi) that though the respondents refunded a sum of
Rs.5,00,000/ on 7.08.2006, promising to repay the balance within
six months, they failed to honour the commitment; (vii) that,
therefore, the respondents were liable to pay a sum of
Rs.5,50,000/towards principal and a sum of Rs.4,98,000/
towards interest, thus, totaling to Rs.10,48,000/.
5. The averments in the second suit in brief were as follows: (i)
that in the year 20012002, respondent No.1 lured the plaintiff and
her husband to join him in his real estate business: (ii) that since
the appellant and her family were residing in Kurukshetra and the
respondents were living in Chandigarh, the respondent No.1 got the
signature of the appellant in some blank papers, on the ground
that it was not possible to shuttle every time between these two
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places, whenever a transaction was to be completed; (iii) that the
appellant and her son were having account in the same branch of
the same bank in which respondent Nos.1 and 2 were also having
account; (iv) that with a view to make available necessary funds, for
the use of respondent No.1 in real estate dealings, the appellant
and her son kept substantial amounts to their credit in their bank
account; (v) that in March, 2006 the appellant and her husband
were shocked to find that substantial amounts totaling to
Rs.54,50,000/ had been withdrawn from their account on different
dates by the respondents; (vi) that on her request, the bank officers
produced the records, which disclosed that a cheque dated
30.12.2005 for a sum of Rs.25,00,000/, signed by respondent
No.3 by forging the signature of the plaintiff had been encashed,
apart from the withdrawal of a sum of Rs.9,50,000/ on 9.05.2005
and the transfer of another sum of Rs.20,00,000/ purportedly on
the written request of the appellant on 27.8.2005; that the
(vii)
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withdrawals/ transfer of these amounts were not authorized by the
appellant, but had been done by misusing the signatures obtained
from the appellant; (viii) that after finding out these facts, the
appellant lodged a complaint in FIR No.195 on 14.12.2006 against
the respondents for the offences punishable under Sections 420,
467, 468 and 471 read with Section 120B of the Indian Penal
Code; that the respondents were granted anticipatory bail in the
(ix)
criminal case, upon their furnishing bank guarantee for a sum of
Rs.50,00,000/ and (x) that the amounts withdrawn by/transferred
to the account of the defendants, together with interest @ 12% per
annum worked out to Rs.67,31,000/ and (xi) that therefore they
were filing the suit for recovery of the said amount.
6. The case of the respondents in the first suit for recovery of
Rs.10,48,000/ was: (i) that they never borrowed any money from
the appellant; (ii) that the amount received by them under the
cheque dated 18.11.2003 was for the purpose of investment in a
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property, which was part of the real estate business; (iii) that the
payment of Rs.5,00,000/ made by them on 7.08.2006 was in full
and final settlement of the claim, after a compromise was arrived at
the intervention of three persons by name Satish Kumar, Prem Raj
Aggarwal and O.P. Gupta; and (iv) that since there was no
borrowing, the question of payment of interest does not arise and
that the suit was liable to be dismissed.
7. In their written statement of the second suit, it was contended
by the respondents: that the appellant and the respondents
(i)
started doing real estate business jointly from the year 20012002;
(ii) that they purchased and sold many properties and shared the
profits; (iii) that the respondents never got the signatures of the
appellant in blank papers; (iv) that the amounts represented by the
cheques dated 9.05.2005, 27.08.2005 and 30.12.2005 were
towards the investment made by the appellant and her son in the
real estate business; (v) that the appellant issued confirmation
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letters to the bank, which showed that the payments under those
cheques were authorized payments; (vi) that the appellant’s son
actually gave an affidavit both on his behalf and on behalf of the
appellant; (vii) that in the said affidavit, it was admitted by the
appellant’s son that out of the amounts paid under the three
cheques, a sum of Rs.30,00,000/ was given, out of love and
affection; (vii) that the appellant filed a false complaint, as though
the respondents cheated her and withdrawn money by forging the
signatures; (viii) that in view of the allegations against the bank,
the appellant ought to have impleaded the bank as a party to the
suit and (ix) that no money is due and payable by the respondents
to the appellant.
8. Before the trial Court, the appellant examined her husband as
PW1 and examined herself as PW2. The first respondent
examined himself as DW1 and he examined as DWs 2 and 3, the
third party mediators, in the presence of whom a settlement was
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purportedly arrived at. The respondents marked a photocopy of the
letter addressed to the Manager of the bank bearing the signature
of the appellant as Exhibit D1. They also filed the confirmation
letter dated 2.01.2006 as Exhibit D2 and the affidavit purportedly
signed by the appellant’s son both on his behalf and on behalf of
the appellant, as Exhibit D3.
9. By a judgment and decree dated 23.01.2013, the trial Court
dismissed the first suit on the ground that the appellantplaintiff
failed to establish the advancement of the loan and that her failure
to examine her son, who was the joint account holder, as a witness
in the suit, was fatal. The trial Court also held the suit was not
within the period of limitation.
10. By a separate Judgment and decree dated 22.07.2013, the
trial Court dismissed the second suit on the ground that the parties
were in real estate business and that the payment of Rs.5,00,000/
in full and final settlement on 7.08.2006, stood proved by the
version of third party mediators examined as DW2 and DW3. The
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Court also held that the appellant failed to establish fraud on the
part of the respondents.
11. The district Judge, Chandigarh by two separate Judgments
dated 18.03.2015, allowed the first appeals filed by the appellant in
Civil Appeal Nos.903 and 1056 of 2013 and granted a decree in the
first suit for recovery of Rs.5,50,000/ together with interest @
7.5% per annum from the due date till the date of decree and
interest @ 6% per annum from the date of the decree till realization.
In the second suit, the trial court granted a decree for recovery of
Rs.54,50,000/ together with interest @ 7.5 % per annum till the
date of the decree and @ 6% per annum from the date of the decree
till realisation.
12. The respondents filed two second appeals in RSA Nos.6134 of
2015 and 130 of 2016. Both the second appeals were allowed by
the High Court by a Judgment and decree dated 20.03.2018
resulting in the dismissal of the 2 money suits filed by the
appellant. Not stopping with the mere allowing of the appeals, the
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High Court went a step further by directing the appellant to refund
the amount of Rs.55,00,000/ paid by the respondents, by virtue of
the order passed in the anticipatory bail application, together with
interest @ 7% per annum. It is against the said common judgment
that the plaintiffappellant has come up with the above appeals.
13. The Contention of the Shri Rajiv Bhalla, learned counsel for
the appellant is that the trial Court as well as the High Court went
completely on a wrong track by accepting the plea of full and final
settlement set up by the respondents and that the High Court went
overboard in passing an order for refund of money paid in the
proceedings for grant of anticipatory bail.
14. Per contra, it is contended by Mr. Nidhesh Gupta, learned
senior counsel for the respondent that the failure of the appellant
to implead her son as a coplaintiff or atleast to examine him as a
witness, coupled with her own admissions as PW2, falsified her
case. Once it was found that the payments to the respondents were
authorized and once it was established through third party
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mediators that there was a settlement, the appellantplaintiff was
bound to fail and that therefore, the judgment of the High Court
does not warrant any interference.
15. We have carefully considered the rival contentions and have
also gone through the pleadings, evidence and the Judgments of all
the three Courts.
16. As we have seen earlier, the first suit was for recovery of a sum
of Rs.5,50,000/, which remained unrefunded, out of the amount
of Rs.10,50,000/ allegedly paid by way of loan. The receipt of
Rs.10,50,000/ by way of cheque No.459745 dated 18.11.2003 was
admitted by the respondents. Similarly the repayment of
Rs.5,00,000/ by the respondents to the plaintiffappellant on
7.08.2006 is admitted by the appellant. The only defence set up by
the respondents was that the payment of Rs.5,00,000/ made by
them on 7.08.2006 was by way of full and final settlement. To show
that there was a full and final settlement, the respondents
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examined two third party mediators. But no receipt was taken by
the respondents from the appellant that the payment of
Rs.5,00,000/ on 7.08.2006 was in full and final settlement. There
was also no written memorandum of compromise/settlement.
When payment of a certain amount of money and the repayment of
only a portion of the same are admitted, the party pleading that
such a part repayment was in full and final settlement, has a huge
burden cast upon him to show that there was a settlement. Oral
evidence of the so called third party mediators, is not sufficient to
establish full and final settlement, in cases of this nature, where all
transactions have happened only through banking channels and
the defendants claimed that there were business transactions. It is
unbelievable that the respondents, who reached such a settlement,
failed to have the same recorded in black and white, either in the
form of a memo or in the form of a receipt.
17. Interestingly, Exhibit D3 filed by the respondents is an
affidavit purportedly signed and verified by the appellant’s son on
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8.03.2006, both on his behalf and on behalf of his mother (the
appellant), agreeing to treat a sum of Rs.30,00,000/ paid by the
appellant, as a payment made out of love and affection. If, on
8.03.2006, the appellant and her son were gracious enough to treat
a huge amount of Rs.30,00,000/ as one made out of love and
affection, there could have been no occasion for a dispute requiring
mediation at the intervention of third parties, on 7.8.2006,
resulting in the payment of Rs.5,00,000/ by the respondents to
the appellant in full and final settlement. Unfortunately, all the
three Courts failed to juxtapose these two events which happened
in an interval of five months, to see through the game.
18. In simple terms, the case of the appellantplaintiff in the first
suit was one of lending and nonpayment. The defence set up by
the respondents was one of payment of a lesser amount (than the
original amount), in full and final settlement. A party who admits
receipt of certain amount of money on a particular date and pleads
discharge by way of a full and final settlement at a latter date, is
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the one on whom the onus lies. This onus was not discharged by
the respondents in the first suit and, hence, the plaintiff was
entitled to succeed in the first suit. The High Court completely
overlooked this aspect.
19. Coming to the second suit, the case of the appellantplaintiff
was that various amounts of money were either withdrawn from or
transferred out of their accounts, by the defendants unauthorisedly
and that the amounts so taken away totaled to Rs.54,50,000/. The
defence of the respondents was that the amounts represented
authorized payments for the purchase and sale of properties in a
real estate business and that out of those amounts, a sum of
Rs.30,00,000/ was treated as a payment made out of love and
affection.
20. Let us assume for a moment that the amount of
Rs.54,50,000/ either withdrawn or transferred from out of the
account of the appellant by the respondents represented authorized
payments, made by the appellant towards investment in real estate
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business. In such a case, the respondents are obliged to produce
the accounts of the real estate business and show how those
amounts were accounted for. The respondents could not produce
any books of account. Therefore, the respondents thought it
convenient to claim that all those amounts were investments in a
real estate business and that a portion of it was agreed to be
treated as a gratuitous payment. Investments in business dealings
and gratuitous payments do not normally go together. As in the
first case, the flow of money from the account of the appellant
plaintiff into the respondents’ account is admitted. While the
appellantplaintiff termed such a flow of money as unauthorized
withdrawal /transfer, the respondents claimed the same to be part
of investment in real estate business. In the light of such a defence,
the onus, even in the second suit, was on the defence to show that
there were business dealings and that the amount stood completely
accounted for. No books of accounts were produced by the defence
to show that the amounts that flowed out of the plaintiff’s bank
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account were absorbed and accounted for within business.
21. Exhibit D3 affidavit is a very curious document whose
admissibility itself is questionable. It starts with a solemn
affirmation reading “We Anita Rani,…. and Sulabh Singla… do
hereby solemnly affirm and declare as under ”. But it is signed only
by Singla. According to this affidavit, sworn on 8.03.2006, the
appellantplaintiff and her son had given Rs.30,00,000/ to the
respondents out of love and affection. The affidavit goes further to
say that there was no transaction between the deponents and the
respondents. This affirmation allegedly made on 8.03.2006 that
there was no transaction between them, stands in contrast to the
claim of full and final settlement made on 7.08.2006.
22. In a suit for recovery of money, a defendant admitting the
receipt of money but pleading that the same was a gratuitous
payment, is obliged to prove that it was a gratuitous payment. As a
matter of fact Exhibit D3 affidavit dated 8.03.2006 does not use
the expression “gratuitous payment ”, but uses the expression “love
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and affection”. But this affidavit also states that there was no
transaction between the deponents and the respondents. Thus
while placing reliance upon this affidavit, the defendants actually
pleaded a mutually contradictory case, as reflected in paragraph 8
of the written statement which reads as follows:
“It is added that from the aforesaid amount, a sum of Rs.
30.00 lacs was given by the plaintiff to the defendants out of
love and affection being near relations and there was no
transaction between plaintiff and defendants to that effect.
Suit for recovery of the amount against the defendant by the
plaintiffs is not maintainable as the defendants are under no
legal obligation to pay back the amount to the plaintiff. The
defendants never borrowed the amount nor are under any
obligation to pay back the amount to the plaintiff. Copy of the
affidavit is attached herewith. Subsequently, the defendants
had settled their accounts pertaining to sale purchase of
properties jointly as well as other properties purchased in
order to run property dealer business and a sum of Rs. 5.00
lacs was paid to the plaintiff on 7.8.2006 in full and final
settlement of her claim through cheque dated 7.8.2006 and
the said cheque has been encashed by the plaintiff. The said
compromise was got arrived at by the intervention of Shri
Satish Kumar, S/o Shri Om Parkash, Prem Raj Aggarwal S/o
Shri Dev Raj Aggarwal and Shri O.P. Gupta S/o Shri Raghu
Nath Gupta. The plaintiff accepted the said cheque of a sum
of Rs. 5.00 lacs in adjustment/settlement of all the accounts
with regard to the amounts taken in satisfaction of her claim
fully and finally.
23. If as per the above pleadings and Ex. D3, there was no
transaction, but a huge amount of Rs.30,00,000/ was treated on
17
8.03.2006 as a gratuitous payment, there was no occasion for the
settlement of any accounts on 7.08.2006 resulting in a full and
final settlement of the claim.
24. If the parties have had business dealings from the year 2001
2002, it is hard to believe that a part of the amounts that flowed
out of the account of the plaintiff, was out of love and affection. The
only piece of evidence on the basis of which the gratuitous nature
of payment is sought to be proved is Exhibit D3, but it does not
contain the signature of the appellant. Therefore, the plea of
gratuitous payment is unbelievable and was not established by the
respondents.
25. Once the plea of gratuitous payment falls to the ground,
Section 70 of the Indian Contract Act, 1872 will come into play.
Section 70 reads as follows:
“70. Obligation of person enjoying benefit of non
gratuitous act. Where a person lawfully does anything for
another person, or delivers anything to him, not intending to
do so gratuitously, and such other person enjoys the benefit
thereof, the latter is bound to make compensation to the
18
former in respect of, or to restore, the thing so done or
delivered.”
26. As held by this Court in the
State of West Bengal vs. B.K.
1
, Section 70 is based on the premise that
Mondal & Sons
something was done by one party for another and that the work so
done voluntarily, was accepted by the other. Therefore, as a
corollary, the plea that there was a subsisting contract in the
nature of business transactions, is antithetic to the very essence of
section 70. This is why section 70 forms part of Chapter V of the
Indian Contract Act, which is titled as “Of certain relations
resembling those created by contract”.
27. As pointed out earlier, the respondents have admitted that the
moneys as claimed by the appellantplaintiff were either paid by the
plaintiff or flown out of the plaintiff’s account into their own
account. Therefore, the onus was actually on the respondents to
prove either a discharge by way of settlement of accounts or the
gratuitous nature of the payment. The respondents miserably failed
1 AIR 1962 SC 779
19
to discharge the onus of proof so cast upon them. Hence, the
plaintiffappellant is entitled to a decree despite a few discrepancies
in her evidence, especially when the discrepancies have no bearing
upon the payment/flow of monies from the plaintiff to the
defendants.
28. In view of the above, the appeals are allowed. The Judgment
and decrees of the High Court are set aside and the Judgment and
decrees of the First Appellate Court are restored. In other words,
there will be a decree in both the suits, as per the Judgment of the
District Court, Chandigarh dated 18.03.2015 in Civil Appeal
Nos.903 and 1056 of 2013. The appellant will be entitled to costs in
these appeals which we quantify at Rs.50,000/. The amount
deposited by the appellant pursuant to the Order passed by this
Court on 18.05.2018 and deposited in an interest bearing fixed
deposit pursuant to the Order passed by this Court on 14.12.2018
shall be released by the Registry to the appellant together with the
accrued interest.
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…..…………....................J.
(Hemant Gupta)
.…..………......................J
(V. Ramasubramanian)
DECEMBER 16, 2021
NEW DELHI.
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