Point of Law: Mere introduction of the words “without prejudice” have no significance and the debtor clearly acknowledged the debt even after action was initiated under the Act and even after payment of a smaller sum, the debtor has consistently refused to pay up

JUDGMENT :

The judgment of the learned XXVI Additional City Civil and Sessions Judge at Mayo Hall, Bangalore (CCH 20) dated 11.11.2010 in O.S.No.15279/2004 dismissing the suit of the plaintiff is under challenge in this appeal.

2. The plaintiff is the appellant herein. Defendant is the respondent. Parties shall be referred to during the course of this judgment as per their ranks before the Court below. During the pendency of this appeal, plaintiff died and his LRs have come on record.

3. The plaintiff instituted O.S.No.15279/2004 against the defendant before the Court below for recovery of a sum of Rs.4,00,170/-with interest at the rate of 12% p.a. from the date of filing the suit till the date of realization and costs. It is the case of the plaintiff and the defendant that they were both employees of Reserve Bank of India, Bangalore Branch and they knew each other. It is the case of the plaintiff that defendant was running Chits Group. The plaintiff joined three such groups namely, two chits of Rs.1,00,000/-each for 20 months with 20 members with each member contributing Rs.5,000/-per month, both beginning from December, 2000 and another for Rs.3,00,000/-of 20 members for 20 months with each member contributing Rs.15,000/-per month beginning from July, 2001. Accordingly, plaintiff started to pay the chit amounts in respect of all the three chit groups to the defendant through cheques drawn on RBI Employees Cooperative Bank Ltd., N.T. Road, Bangalore, and he has furnished the details of the same in the plaint. Briefly put, it is his case that he had issued 14 cheques to the defendant on various dates towards subscription payments and on five occasions he had made payments by cash. According to him, he had in all paid Rs.3,39,170/-to the defendant towards subscription of the three chit groups. It was his further case that defendant did not repay the amount and therefore he was liable to pay the amount with interest thereon at 12% p.a. from the date of the suit till the date of realization with costs.

4. The defendant filed his written statement denying the averments in the plaint and contending that as an employee of Reserve Bank of India it was illegal for him to run any Chit Groups and in fact he was not running any such chit groups and plaintiff did not make payment to him either through cheques or in cash as alleged by him in the plaint and therefore, there was no question of defendant being due in any amount as alleged in the plaint to the plaintiff. The defendant contended that he had paid Rs.2,49,200/-to the plaintiff on different dates and further he had also given Rs.90,000/-by way of cheque on 26.07.2001 and Rs.9,500/-on 08.08.2002 by cheque. It was the contention of the defendant that plaintiff had returned the amount received by him in cash from the defendant through various cheques. It was specifically contended by the defendant in the written statement that plaintiff used to receive the money from the defendant in cash and he was returning the same to the defendant through cheques with an ulterior motive to show the same in the income tax statement.

5. On the said pleadings, the trial Court framed the following issues :

“1. Whether plaintiff proves that he had paid Rs.3,39,170/-on various dates towards monthly installments of 3 chits group conducted by defendant?

2. Whether defendant proves that plaintiff used to borrow money in cash from him and returned the same through cheques?

3. Whether defendant proves that he had paid Rs.90,000/-on 26/7/2001 and Rs.9,500/-on 8/2/2002 to plaintiff?

4. Whether the suit of plaintiff is barred by time?

5. Whether plaintiff is entitled for interest at the rate of Rs.12% p.a.?

6. Whether plaintiff is entitled for the relief’s claimed in the plaint?

7. What decree or order?”

6. The plaintiff examined himself as P.W.1 and got marked Ex.P.1 which was the statement of his Bank account. Def