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Karnataka High Court
K.Shivalingaiah - Appellant
Versus
V.Chandrashekara Gowda - Respondent
Decided On : 02-28-92
R.F.A. : 439 of 1987
Judgement: Recovery Suit - Karnataka Money Lenders Act - S. 11 - S. 6 - S. 7 - S. 30 - S. 28 - [RECOVERY SUIT] - [KARNATAKA MONEY LENDERS ACT] - [S. 11, S. 6, S. 7, S. 30, S. 28]
Fact of the Case:
The plaintiff filed a suit for recovery of a sum of Rs. 32,234/- from defendants 1 and 2 based on a pronote dated 10-9-1980 executed by defendants 1 and 2 for a sum of Rs. 20,000/- in favor of defendant-3 and on the basis of Ex. P. 3 executed by defendant-3 in favor of the plaintiff for a valid consideration, assigning the debt due under the pronote dated 10-9-1980 Ex. P. 3. Defendants-1 and 2 resisted the suit, contending that the pronote was not legally enforceable, was materially altered, and that the suit was not in time. The trial Court dismissed the suit only on the ground that on the date of the transaction, the original lender and the assignor of the pronote and the plaintiff as the assignee of the pronote did not hold money lenders license.
Finding of the Court:
The trial Court dismissed the suit only on the ground that the plaintiff failed to prove that on the date of the transaction he and the third defendant held the money lenders license. All other issues were held in favor of the plaintiff. The plaintiff appealed the decision and sought permission to produce additional evidence to prove that he and the third defendant held the money lenders license on the date of the transaction. The Court allowed the additional evidence and found that the plaintiff and the third defendant held the money lenders license on the date of the suit. The Court also found that the plaintiff proved the execution of the pronote and the valid assignment of the debt due under the pronote.
Issues: The issues raised for trial included the proof of the loan transaction, the validity of the assignment of the pronote, the material alterations to the pronote, the limitation of the suit, and the plaintiff's entitlement to recover the amount from the defendants.
Ratio Decidendi: The Court held that the plaintiff and the third defendant held the money lenders license on the date of the suit, and the plaintiff proved the execution of the pronote and the valid assignment of the debt due under the pronote. The Court also allowed the plaintiff to claim interest at 12% per annum from the date of the pronote till the date of the suit and at 6% from the date of the suit till the date of realization.
Final Decision: The appeal was allowed, and the judgment and decree of the trial Court were set aside. The suit of the plaintiff was decreed with costs throughout for a sum of Rs. 20,000/- with interest at 12% from 10-9-1980 to 8-8-1983, and at 6% from the date of the suit till the date of realization.
( 1 ) THIS appeal by the plaintiff is preferred against the judgement and decree dated 29-11-1986 passed by the learned XII Additional City Civil Judge, Bangalore City, in O. S. No. 2379/1983. Respondents-1 to 3 are defendants 1 to 3 in the aforesaid suit. In this judgement the appellant will be referred to as the plaintiff and respondents 1 to 3 as defendants 1 to 3. 1. 1. The aforesaid suit was filed for recovery of a sum of Rs. 32,234/- from defendants 1 and 2 on the basis of the pronote dated 10-9-1980 executed by defendants 1 and 2 for a sum of Rs. 20,000/- in favour of defendant-3 and also on the basis of Ex. P. 3 executed by defendant-3 in favour of the plaintiff for a valid consideration, assigning the debt due under the pronote dated 10-9-1980 Ex. P. 3. 1. 2. The case of the plaintiff was that defendants-1 and 2 borrowed a sum of Rs. 20,000/- on 10-9-1980 from defendant-3 executing a pronote for the said sum and further agreeing to pay interest at 1. 75 per cent per month; that defendant-3 assigning the pronote debt on 30-6-1983 in favour of the plaintiff on receiving the amount due under the pronote; that the plaintiff issued notice dated 2-7-1983 as per Exhibit P. 1 calling upon defendants-1 and 2 to pay the debt due under the pronote and further informed them that the pronote in question was assigned to him for consideration. Defendants-1 and 2 sent a reply dated 27-7-1983 denying the execution of the pronote. Therefore, the plaintiff filed the aforesaid suit on 8-8-1983 for recovery of a sum of Rs. 32,234/- with costs.
( 2 ) DEFENDANTS-1 and 2 resisted the suit. They, inter alia, contended that they had no transaction with defendant-3, that their father Venkategowda died in the year 1979 and in the year 1980 they were told by K. Siddalingaiah, who died on 14-12-1980; that their father was due to him in a sum of Rs. 20,000/-; that believing the words of K. Siddalingaiah they affixed their signatures to the document on 9-2-1980. They also further alleged that on the suggestion of late K. Siddalingaiah the name of S. Ankaiah (defendant-3) was also inserted in the lenders column and no consideration was passed under the document; that the pronote in question was not legally enforceable; that it was materially altered; that the suit was not in time; that the assignment of the alleged debt by defendant-3 in favour of the plaintiff was not true; that it was an attempt to show that the assignment was for consideration; that the plaintiff was put to strict proof of the same; that the interest claimed was usurious; that the plaintiff and Ankaiah were money lenders and that they did not possess valid money lending licence as per law. Thus, they prayed for dismissal of the suit.
( 3 ) DEFENDANT-3 did not file any written statement. He was examined as PW 2.
( 4 ) ON the basis of the pleadings of the parties, the trial Court raised the following issues for trial :1. Whether the plaintiff proves that on 10-9-1980 defendants-1 and 2 jointly borrowed a sum of Rs. 20,000/- from the third defendant by executing on demand pronote ? 2. Does he further prove that defendant-3 has assigned the pronote and the consideration receipt in favour of the plaintiff on 30-6-1983 for full consideration, and that the said fact was intimated to both defendants-1 and 2 ? 3. Whether the defendants prove that they executed the pronote in favour of the third defendant under the circumstances mentioned in para 2 of their written statement without consideration ? 4. Do they further prove that there have been material alterations to bring the suit within the period of limitation ? 5. Do they further prove that the suit is barred by limitation ? 6. Is plaintiff entitled to recover Rs. 32,234/- from the defendants or to what amount ? 7. What order ? What decree ? The additional issue reads as follows : 8. Whether the plaintiff is doing money lending business without valid licence ?
( 5 ) ON behalf of the plaintiff, he gave evidence as PW 1 and
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