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2006 Supreme(Cal) 685
High Court Of Calcutta
Before Mr. Justice Arun Kumar Bhattacharya
CHIRANJILAL SUSHIL KUMAR - Appellant
Versus
RAMCHANDAR KANHAIYALAL - Respondent
C. S. 869 Of 1988
Decided On : 11/09/2006
M.Ojha, Mainak Bose, S.K.Jhunjhunwala, SUBHOJIT GHOSH, SUDIP GHOSH
TRANSACTIONS THROUGH CHEQUES AND DRAFT WERE NOT LOAN BUT IN SUBSTANCE ADVANCE FOR GOODS SOLD.
Headnote:
MONEY LENDING - SUIT FOR RECOVERY OF LOAN - ISSUES - WHETHER THE TRANSACTIONS WERE LOAN OR ADVANCE FOR GOODS SOLD - WHETHER THE PLAINTIFF ADVANCED A SUM OF RS. 49,600/- TO DEFENDANT NO. 1 - WHETHER DEFENDANT NO. 2 LENT AND ADVANCED A SUM OF RS. 40,000/-TO DEFENDANT NO. 1 - WHETHER DEFENDANT NO. 3 LENT A SUM OF RS. 1,54, OOO/- TO DEFENDANT NO. 1 IN TWO INSTALMENTS - WHETHER DEFENDANT NOS. 2 AND 3 ASSIGNED THEIR CLAIMS WITH INTEREST IN FAVOUR OF THE PLAINTIFF - WHETHER THE PLAINTIFF IS ENTITLED TO GET A DECREE FOR RS. 3,79,608/-, AS PRAYED FOR, TOGETHER WITH INTEREST - HELD, THE TRANSACTIONS WERE NOT LOAN BUT ADVANCE FOR GOODS SOLD - THE SUIT IS PARTLY DECREED.
Fact of the Case:
Plaintiff filed a suit for recovery of Rs. 3,79,608/- together with interest and other reliefs. The plaintiff's case was that between 30.07.85 and 14.08.85 the plaintiff firm lent a sum of Rs. 49,600/- to defendant no. 1 by draft and cheque, repayable after three months with interest @ 20% p. a. thereon, and thus a sum of Rs. 80,802/- including interest upto 30.09.88 fell due which defendant No. 1 failed to pay despite demands. Defendant no. 2 lent a sum of Rs. 40,000/- by a cheque dated 24.12.85 drawn on New Bank of India, Clive Row Branch, to defendant No. 1 on 30,12.85, repayable after two months with interest @ 20% p. a. thereon, and thus a sum of Rs. 61,998/- including interest upto September, 1988, fell due which defendant No. 1 failed to pay despite demands. Defendant no. 3 advanced a sum of Rs. 50,000/- by a cheque dated 24.12.85 drawn on Allahabad Bank, repayable after two months and a further sum of Rs. 1,04,000/- by a cheque dated 25.01.86 drawn on the same Bank, repayable after one month, to defendant No. 1 with interest @ 20% p. a. thereon and thus a sum of Rs. 2,36,808/-including interest upto September, 1988 fell due which defendant No. 1 failed to pay despite demands. On 01.09.88 defendant nos. 2 and 3 assigned their rights over the said sum of Rs. 40,000/- and rs. 1,54,000/- respectively including right to realize interest to the plaintiff which has duly given notice of such assignments to defendant no. 1. The plaintiff has thus become entitled to recover the said sum of Rs. 3,79,608/-with further interest @ 20% as agreed upon, from defendant No. 1 who has failed to pay the sum despite demands. Hence the suit.
Finding of the Court:
The Court held that the transactions through cheques and draft were not loan but in substance advance for goods sold. The Court also held that the plaintiff is entitled to recover the second and third claims above i. e. Rs. 2,98, 806/- plus simple interest @ 8% p. a. on the said sum from the date of institution of the suit i. e. 06.10.88 till recovery of the amount.
Issues: 1. Did the plaintiff advance a sum of Rs. 49,600/- to defendant no. 1, as alleged? 2. Did defendant No. 2 lent and advanced a sum of Rs. 40,000/-to defendant No. 1? 3. Did defendant No. 3 lent a sum of Rs. 1,54, OOO/- to defendant no. 1 in two instalments, as alleged? 4. Did defendant Nos. 2 and 3 assign their claims with interest in favour of the plaintiff, as alleged? 5. Is the plaintiff entitled to get a decree for Rs. 3,79,608/-, as prayed for, together with interest? 6. To what other relief or reliefs, is the plaintiff entitled?
Ratio Decidendi: The Court held that the transactions through cheques and draft were not loan but in substance advance for goods sold. The Court also held that the plaintiff is entitled to recover the second and third claims above i. e. Rs. 2,98, 806/- plus simple interest @ 8% p. a. on the said sum from the date of institution of the suit i. e. 06.10.88 till recovery of the amount.
Final Decision: The suit is partly decreed with proportionate cost against defendant No. 1. The plaintiff do get a decree for Rs. 2,98,806/- against defendant No. 1. The plaintiff do further get a decree for interest pendente lite @ 8% p. a. on the said sum from the date of institution of the suit i. e. 06.10.88 till recovery of the amount.
( 1 ) THIS is a suit for recovery of Rs. 3,79,608/- together with interest and other reliefs.
( 2 ) SHORTLY put, the plaintiff's case is that between 30. 07. 85 and 14. 08. 85 the plaintiff firm lent a sum of Rs. 49,600/- to defendant no. 1 by draft and cheque, repayable after three months with interest @ 20% p. a. thereon, and thus a sum of Rs. 80,802/- including interest upto 30. 09. 88 fell due which defendant No. 1 failed to pay despite demands. Defendant no. 2 lent a sum of Rs. 40,000/- by a cheque dated 24. 12. 85 drawn on New Bank of India, Clive Row Branch, to defendant No. 1 on 30,12. 85, repayable after two months with interest @ 20% p. a. thereon, and thus a sum of Rs. 61,998/- including interest upto September, 1988, fell due which defendant No. 1 failed to pay despite demands. Defendant no. 3 advanced a sum of Rs. 50,000/- by a cheque dated 24. 12. 85 drawn on allahabad Bank, repayable after two months and a further sum of Rs. 1,04,000/- by a cheque dated 25. 01. 86 drawn on the same Bank, repayable after one month, to defendant No. 1 with interest @ 20% p. a. thereon and thus a sum of Rs. 2,36,808/-including interest upto September, 1988 fell due which defendant No. 1 failed to pay despite demands. On 01. 09. 88 defendant nos. 2 and 3 assigned their rights over the said sum of Rs. 40,000/- and rs. 1,54,000/- respectively including right to realize interest to the plaintiff which has duly given notice of such assignments to defendant no. 1. The plaintiff has thus become entitled to recover the said sum of Rs. 3,79,608/-with further interest @ 20% as agreed upon, from defendant No. 1 who has failed to pay the sum despite demands. Hence the suit.
( 3 ) THE suit is contested by defendant No. 1 by filing a written statement inter alia denying the material allegations made in the plaint and contending that it was a supplier of Sisil Yarn and Sisil Fibre Cord to Shalimar Rope Works, hereinafter referred to as Shalimar, of which Chiranjilal Jhunjhunwala and his son Sushil Kumar Jhunjhunwala were Director and Constituted Attorney respectively. The said Sushil Kumar who is the father of defendant No. 2 and a Director of defendant No. 3, is a partner of plaintiff firm. The plaintiff as a material Handling Agent of Shalimar used to purchase and obtain delivery of various raw materials on behalf of Shalimar and on several occasions made payments to diverse suppliers including defendant No. 1. Due to labour trouble, there was a lock out in the factory of Shalimar in October, 1985. In December, 1985 Sushil Kumar as Constituted Attorney of Shalimar and partner of plaintiff approached defendant No. 1 for supply of various quantities of Sisil Yarn and sisil Fibre Cord representing that such purchase was in the Interest of Shalimar as the prices of goods had fallen and that steps were being taken to reopen the mill of Shalimar shortly. It was further informed that as Shalimar was lying closed, it would be difficult to arrange for entire payment from Shalimar, and so he would arrange for certain advance payment or part payment from his relatives and associates which would be treated as loan for income tax purpose and immediately after reopening of the mill the entire transaction would be regularized by Shalimar on making payment of price of the goods sold, to defendant No. 1 which will refund the loan to the relatives and associates of sushil Kumar only after payment by Shalimar. In terms of the said agreement, sushil Kumar gave a cheque for Rs. 50,000/- drawn by defendant No. 3 in favour of defendant No. 1 and another cheque for Rs. 40,000/- drawn by defendant No. 2 in favour of defendant No. 1 as advance towards supply of goods by defendant No. 1 to Shalimar. On the basis of said representation made by Sushil Kumar and on good faith defendant No. 1 executed certain confirmations for income tax purpose. On 13. 01. 86 Sushil Kumar handed over a bankers cheque or Pay Order for Rs. 75,0
