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IN THE HIGH COURT OF CALCUTTA
Soumen Sen, J.
Dinesh Ranchhoddas Kapadia – Plaintiff
Versus
Manoj S. Kasliwal – Defendant
C.A. No. 58A of 1996
Decided On : 11-06-2013
LOAN AGREEMENT - RECOVERY OF MONEY - ORAL AGREEMENT FOR SALE - TERRITORIAL JURISDICTION - INTEREST RATE - SECTION 2(h) OF THE INDIAN CONTRACT ACT, 1872 - SECTION 20 OF THE INDIAN CONTRACT ACT, 1872 - SECTION 41 OF THE INDIAN CONTRACT ACT, 1872 - SECTION 138 OF THE INDIAN CONTRACT ACT, 1872 - SECTION 75 OF THE INDIAN CONTRACT ACT, 1872 - SECTION 20 OF THE CIVIL PROCEDURE CODE, 1908 - SECTION 34 OF THE CIVIL PROCEDURE CODE, 1908 - SECTION 100 OF THE CODE OF CIVIL PROCEDURE, 1908 - SECTION 115 OF THE INDIAN EVIDENCE ACT, 1872 - SECTION 134 OF THE INDIAN EVIDENCE ACT, 1872 - SECTION 145 OF THE INDIAN EVIDENCE ACT, 1872 - SECTION 165 OF THE INDIAN EVIDENCE ACT, 1872 - SECTION 176 OF THE INDIAN EVIDENCE ACT, 1872 - SECTION 177 OF THE INDIAN EVIDENCE ACT, 1872:
Fact of the Case:
Plaintiff lent Rs. 25,51,000/- to the defendant as an accommodation loan with an agreed interest rate of 24% per annum, repayable within 90 days or on demand. The defendant received the loan amount by way of a demand draft drawn on State Bank of Saurastra, Calcutta. Despite repeated demands and reminders, the defendant failed to repay the loan. The plaintiff issued a legal notice on 2nd November, 1995, demanding repayment of the loan along with interest. The defendant denied liability and claimed that the amount was paid as earnest money for an oral agreement for sale of 200 acres of land at Diwas.
Finding of the Court:
The court found that the plaintiff had proved the existence of the loan agreement and the defendant's failure to repay the loan. The court also found that the defendant had failed to prove the existence of an oral agreement for sale or that the amount was paid as earnest money for such an agreement. The court further found that the plaintiff had served the legal notice on the defendant and that the defendant had received the same.
Issues: 1. Whether the plaintiff had proved the existence of the loan agreement and the defendant's failure to repay the loan? 2. Whether the defendant had proved the existence of an oral agreement for sale or that the amount was paid as earnest money for such an agreement? 3. Whether the plaintiff had served the legal notice on the defendant and that the defendant had received the same? 4. Whether the court had jurisdiction to try and determine the suit?
Ratio Decidendi: 1. The court held that the plaintiff had proved the existence of the loan agreement and the defendant's failure to repay the loan based on the following evidence: - The plaintiff's testimony - The production of the demand draft and other documentary evidence - The defendant's failure to deny the existence of the loan agreement in his written statement 2. The court held that the defendant had failed to prove the existence of an oral agreement for sale or that the amount was paid as earnest money for such an agreement based on the following: - The defendant's failure to produce any written evidence of the oral agreement - The defendant's failure to explain why he had not sent the alleged letters by registered post - The defendant's failure to call any witnesses to support his claim 3. The court held that the plaintiff had served the legal notice on the defendant and that the defendant had received the same based on the following evidence: - The testimony of the process server - The postal receipt showing that the notice was delivered to the defendant's address - The defendant's failure to deny receipt of the notice in his written statement 4. The court held that it had jurisdiction to try and determine the suit based on the following: - The loan was disbursed from Calcutta - There was no agreement to show that payment was to be made in Mumbai - The plaintiff, being a creditor, was entitled to receive the money at Calcutta
Final Decision: The court decreed the suit in favor of the plaintiff for a sum of Rs. 25,51,000/- with interest at the rate of 8% per annum from the date of institution of the suit till repayment. The court also awarded costs of Rs. 10,000/- to the plaintiff.
Soumen Sen, J.
1. The plaintiff has instituted this suit for recovery of money lent and advanced.
2. In the plaint, the plaintiff makes out a case that in the early part of 1993 the defendant approached the plaintiff for loan to meet certain urgent requirements following which the plaintiff had agreed to give such loan and the defendant had agreed to accept such loan on certain terms and conditions which, inter-alia, includes as follows:-
"(a) The plaintiff would pay Rs. 25,51,000/- by way of accommodation loan to the defendant;
(b) The defendant would refund the said amount being interest @ 24% per annum within 90 (ninety) days thereof or on demand by the plaintiff for repayment of the said amount;"
3. Such agreement was entered into or arrived at between the parties at the plaintiff's office at 64/65, Stephen House, 4, B.B.D. Bag (East), Calcutta-700001. In terms of the said agreement the plaintiff advanced a sum of Rs. 25,51,000/- to the defendant by way of a loan by a demand draft no.HSBC/1 140586 dated 12th March, 1993 drawn on State Bank of Saurastra, Calcutta. The defendant duly accepted such payment and enchased the said demand draft. In spite of repeated demands and reminders, the defendant, however, had failed and/or neglected to pay the aforesaid amount or any portion thereof along with agreed interest. The plaintiff issued a legal notice on 2nd of November, 1995 through his Advocate calling back the said loan along with the interest at the rate of 24% per annum. The said notice was duly received and acknowledged by the defendant. The said notice was duly replied on behalf of the defendant by his advocate by a letter dated 20th November, 1995, denying liability. The said letter of the defendant was duly replied by the learned Advocate on behalf of the plaintiff by a letter dated 20th December, 1995 reiterating the demand. Since in spite of such notice the defendant had failed and neglected to pay the aforesaid loan amount, the present suit was instituted on 11th of March, 1996.
4. The defendant duly contested the said claim of the plaintiff by filing written statement. In the written statement, the defendant contended that such amount was paid by way of an earnest money in respect of an oral agreement for sale concerning about 200 acres of land at Diwas. The defendant contended that the plaintiff, on an earlier occasion, issued two several cheques being Cheque Nos.657083 and 657084 for Rs. 20 lakhs and Rs. 5,51,000/- both dated February 18, 1993 respectively but such cheques were dishonoured on presentation. This fact was suppressed in the plaint. Thereafter the said bank draft was issued as part consideration towards the said oral agreement for sale. The defendant contended that none of the letters annexed to the plaint was ever received and/or served upon the defendant and the defendant had never authorised or instructed Mr. J.W. Mahajon to write a letter dated November 20, 1995 or to make any communication with the plaintiff or his advocate. The defendant denied the existence, validity and genuineness of the letters dated 2nd November, 1995, 20th November, 1995 and 20th December, 1995. The defendant further contended that on the contrary the defendant had forfeited the said amount, namely, Rs. 25,51,000/- in view of failure on the part of the plaintiff to pay the balance consideration within the time stipulated and/or agreed upon between the parties. The defendant contended that the plaintiff had agreed to purchase the total consideration was Rs. 2,04,08,000/- about 200 acres of agricultural land at village - Nagda, District- Diwas, in the State of Madhya Pradesh at a total consideration of Rs. 2,04,08,000/-. According to the defendant, such agreement was entered into in December, 1992 and the same would be evident from the letters dated February 18, 1993, March 15, 1993, April 28, 1994. The plaintiff in spite of knowledge and notice of such forfeiture suppressing the same instituted the instant suit. It was
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