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High Court of Judicature at Madras
S.S. SUBRAMANI
P.V. Sri Rangammal @ Muthuammal & Another
Versus
K. Dharmaraja
S A. No. 455 of 1999 and CMP. Nos. 5512, 5513 and 12639 of 1999
Decided On :Decided On : 06-08-1999
ADMISSION OF DEBT - EXA1 - FAMILY DEBT - JOINT LIABILITY - ESTOPPEL - EVIDENCE ACT, SECTIONS 17-21 - INTEREST ACT, SECTION 3(3) - C.P.C., ORDER 41 RULE 31 - FAMILY BUSINESS - FINANCIAL CAPACITY - SOURCE OF FUNDS - RELEVANCE - CLOSE RELATIONSHIP - COSTS.
Fact of the Case:
Plaintiff filed a suit for recovery of Rs. 2,15,900/- with interest at 18% from defendants 1 and 2, who were brothers, and defendant 3, who was the wife of the deceased brother, Singaraja. Plaintiff claimed that he had lent Rs. 2,00,000/- to defendants 1 and 2 and Singaraja on 18.8.1988 for their family business and that the amount was acknowledged by defendant 2 in an agreement (Ex.A1) dated 18.12.1990. Defendants 1 and 2 contested the suit, denying the loan and claiming that the amount was borrowed by Singaraja for his personal business. Defendant 3 remained ex parte. The trial court decreed the suit, holding that Ex.A1 was an admission of debt and that the loan was for the benefit of the joint family. The lower appellate court confirmed the decree.
Finding of the Court:
The High Court held that Ex.A1 was both an admission and acknowledgment of liability by defendant 2, and that it raised an estoppel against him. The court found that the loan was incurred for the benefit of the joint family, as evidenced by the fact that defendant 2 had discharged various debts incurred by Singaraja. The court also held that plaintiff was not required to prove his financial capacity to advance the loan, as the debt was admitted by defendant 2. The court dismissed the appeal, directing the parties to bear their respective costs.
Issues: 1. Whether Ex.A1 is a valid admission of debt and acknowledgment of liability by defendant 2? 2. Whether the loan was incurred for the benefit of the joint family? 3. Whether plaintiff is required to prove his financial capacity to advance the loan? 4. Whether the suit is maintainable in the absence of a document evidencing the loan?
Ratio Decidendi: 1. An admission under Sections 17-21 of the Evidence Act is substantive evidence and shifts the burden of proof on the maker. Unless explained or shown to be wrong, it is an efficacious proof of the facts admitted. 2. A joint family is liable for debts incurred by its manager for moral purposes or other reasons recognized under Hindu Law. 3. The source of funds used to repay a debt is not relevant when the debt is admitted and the borrower agrees to discharge it. 4. A suit for recovery of a loan is maintainable even in the absence of a document evidencing the loan, if there is other evidence to prove the debt.
Final Decision: The appeal was dismissed, directing the parties to bear their respective costs.
1. Defendants 1 and 2 in O.S. No. 205 of 1991 on the file of Additional Sub Court, Srivilliputhur are the appellants.
2. Parties herein will be referred to according to their rank in the suit.
3. Plaintiff filed the above suit for recovery of an amount of Rs. 2,15,900/- with interest at 18% on the principal amount of Rs. 2,00,000/- from the date of plaint till date of realisation personally from second defendant and in alternative directing defendants 1 to 3 to pay the amount jointly and severally and in the alternative pass a personal decree against 2nd defendant and as against defendants 1 and 3 to be payable from the estate of late P.S.V Singaraja and for costs of the suit.
4. The material averments in the plaint could be summarised thus:
Third defendant is the daughter of plaintiff. Late P.S. Velayutharaja, who died on 21.10.1985 is the husband of first defendant and father of second defendant. He had another son by name, Singaraja, and third defendant married him.
5. It is the case of plaintiff that after the death of father P.S. Velayutharaja, the business that was being conducted by late father was taken over by them. Father was running a cycle shop where he was dealing with bicycle for hire apart from fruits and house hold articles. He was also running a lodge under the name and style P.S.V. Buildings. After his death, elder son Singaraja and his brothers improved the business out of the United income of the properties and also by borrowing money from third parties. Late Velayutharaja had put up buildings in the lodge for which the family was in need of money for improvements. It is the case of plaintiff that defendants 1 and 2 along with late Singaraja approached plaintiff for financial arrangements and he used to help them to the extent of Rs. 10,000/- and Rs. 20,000/- depending upon the requirements.
6. During the end of June 1988, defendants 1 and 2 and late Singaraja were in dire need of more money, more than Rs. 2 lakhs pertaining to Dairy Farm, Cycle Mart, Central Traders, all of them are family concerns and also to a certain extent to the lodge. They wanted plaintiff to make some arrangements to help them and plaintiff paid the money on 18.8.1988 to defendants 1 and 2 and late Singaraja in their house at Rajapalayam. The amount paid did not carry any interest and no document was also taken in view of close relationship. Late Singaraja and defendants 1 and 2 agreed to return the amount within a period of six months. Plaintiff also agreed for such a course.
7. It is further alleged that the family was conducting Central Cycle Mart, Central Traders, P.S.V. Farms, P.S.V. Lodge and also carrying on registered chit fund business. Though the Chit Fund Business was in the name of Singaraja, it was conducted for the benefit of family. Singaraja died on 20.4.1989 and there was complete set back in the family, through various creditors and they decided to dispose of some of the properties standing in the name of late Singaraja and second defendant. Considerable money was mustered and majority of the debts were cleared. It is said that third defendant also joined second defendant in order to sell immovable properties and valuable house sites, for which no amount was given to third defendant. Whenever second defendant asked third defendant to sign documents, she used to do so.
8. So far as plaintiff is concerned, he has not taken any documents for the amount which he advanced to defendants 1 and 2 and Singaraja. That was exploited by second defendant by saying that he would not make any payment to plaintiff. When plaintiff came to know about such a talk, he informed the same to his caste elders and due to their intervention, an agreement was entered on 18.12.1990, whereby second defendant agreed to settle the claim of plaintiff. There was also some other arrangement in regard to the share of late Singaraja in the family properties. Second defendant agreed to pay a sum of Rs. 5,00,000/- to third defendant in monthly
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