Back
Andhra Pradesh High Court
VINOD KUMAR - Appellant
Versus
KESHAV ANAND - RESPONDENT
Decided On: 12-20-01
The binding nature of written contracts and the significance of a party's actions in determining the legal outcome.
Headnote:
Order 37 Rule 3 - Loan Agreement - Order 37 Rule 3, Order 34, Negotiable Instruments Act, Order 37 Rule 1
Fact of the Case:
Defendant received loans and executed receipts and a mortgage deed. Defendant raised legal objections regarding the nature of the suit and the involvement of a third party. Defendant also disputed the cash payments and alleged fraud by the plaintiffs.
Finding of the Court:
The court found that the defendant's defense was contradictory and lacked merit. The court dismissed the application for leave to contest and decreed the suit in favor of the plaintiffs.
Issues: Nature of the suit, involvement of third party, validity of cash receipts, alleged fraud, and defendant's defense.
Ratio Decidendi: Defendant's contradictory defense and issuance of cheques in favor of a third party indicated the existence of a loan agreement, supporting the applicability of Order 37 Rule 3. The court emphasized the binding nature of written contracts and the significance of defendant's actions in determining the outcome.
Final Decision: The application for leave to contest was dismissed, and the suit was decreed in favor of the plaintiffs.
( 1 ) THE facts giving rise to the application for leave to contest moved by the defendant under Order 37 rule 3 (5) of Civil Procedure Code are as under
( 2 ) ON representation of the defendant that he was facing financial problems the plaintiff no. 1. advanced a loan of Rs. 6 lacs to him and the defendant on receipt of the said amount executed a receipt dated 5. 3. 97 and he also took a loan of Rs. 3 lacs from plaintiff no. 2 and in consideration of the receipt of the said amount, the defendant also executed the receipt dated 5. 3. 97. The defendant also handed over the original title deeds in respect of property bearing no. A-4/c--26, Janak Puri, New delhi and executed a deed of mortgage in respect thereof.
( 3 ) THE defendant agreed to pay a minimum instalment of rs. 10,000/- per month and had paid only two monthly instalments of Rs. 10,000. 00 and had not paid any amount after June, 1997 and according to the plaintiff the instant case is based upon the receipts as well as the agreement dated 5. 3. 97 and as such is covered under the provisions of Order 37 Rule 3 (5) Code of Civil Procedure.
( 4 ) THE defendant has at the outset raised the legal objection that the deed of mortgage by way of deposit of title deeds alleged to be executed by the defendant in favour of the plaintiff, makes the suit as a mortgage suit and, therefore, is covered under the provisions of Order 34 Code of Civil Procedure and not under 37 Code of Civil Procedure. Other facts disclosed by the defendant in the affidavit in support of leave to contest are as under:-
1) That the defendant has been subscribing chit funds run by Palvinder Singh and as per the traits of the chit fund business, the signatures of the persons at the time of taking the chit amounts are taken on revenue stamped blank papers and non judicial stamp and the said papers are now being fabricated by the plaintiff to play fraud upon the defendant and the Court.
2) That the defendant has never taken a loan nor has dealt with the plaintiff in any manner whatsoever.
3) The mortgage deed is in favour of three persons i. e. plaintiff nos. 1 and 2 and Palvinder Singh whereas only plaintiff nos. 1 and 2 have filed this suit and, therefore, the suit is bad for non-joinder of necessary party Palvinder Singh, the person with whom the defendant- has been subscribing the money and whose name also find mention in the said mortgage deed.
4) That even otherwise the amount of money alleged to have been given in cash is against the law as the law prohibits to make such huge payments in cash.
5) The plaintiffs are the Bank employees. Son of the defendant is also employed in the same bank. The instant suit has been filed in connivance with Palvinder singh who is in possession of the signatures of the defendant on various blank papers.
6) That said Palvinder Singh has filed a criminal complaint under Section 138 of the Negotiable instruments Act against the defendant wherein he has taken a contradictory stand that shares worth Rs. 7,70,000. 00 were to be taken from the defendant and the defendant assured the complainant that the delivery of the shares will be made within two days from the date of the payment. The defendant failed to deliver his shares pleading his inability as the price of the shares had gone up and it was not possible for him to give delivery of shares, the defendant assured the complainant that he will refund the amount of Rs. 7,70,000. 00 alongwith interest and requested for treating the amount of Rs. 7,70,000. 00 as loan. The defendant also issued receipt acknowledging the loan of rs. 7,70,000/ -.
( 5 ) ACCORDING to Mr. M. L. Khattar, learned counsel for the defendant it is apparent from the stand taken by palvinder Singh that he had given the said amount as quid pro quo for giving the shares and not as a loan but later on when the defendants expressed his inability to supply the shares; it was a mutual understanding that this amount be treated as loan.
( 6 ) ACCORDING to M
