JUDGMENT :

P.T. ASHA, J.

Prayer in A.S. No. 824 of 2008: Appeal suit filed under Section 96 of the Code of Civil Procedure against the Judgment and Decree in O.S. No. 48 of 2007 on the file of the learned I Additional District Judge, Erode dated 31.01.2008.

Prayer in A.S. No. 825 of 2008: Appeal suit filed under Section 96 of the Code of Civil Procedure against the Judgment and Decree in O.S. No. 50 of 2007 on the file of the learned I Additional District Judge, Erode dated 31.01.2008.

1. A common Judgment is being pronounced in the above First Appeal, since the facts in both the suits namely O.S. No. 48 of 2007 and O.S. No. 50 of 2007 are identical, in so far as the plaintiff is concerned and the cause of action for filing the suit. However, I shall be dealing with the pleadings in both the suits separately. The parties are referred to in the same rank as before the Trial Court.

Plaintiff's case in O.S. No. 48 of 2007:

2. The plaintiff claims to be a registered firm doing finance business at Erode. The firm is a registered firm. The first defendant which was a proprietary concern doing business in Textiles under the name and style of “Lakshmi Textiles” had issued cheques favouring the 2nd and 3rd defendants, which were also firms and close business associates of the 1st defendant. The defendants 2 and 3 would discount these cheques on commission payment with the plaintiff on the assurance that the same would be honoured by the 1st defendant on presentation.

3. The 1st defendant had issued the following cheques which were discounted by the defendants 2 and 3 are detailed below:

M/s. Sri Lakshmi Saraswathi Textile (2nd Defendant):

M/s. Sivasakthi Textiles (3rd defendant):

When the cheques were presented by the plaintiff for collection, the same was returned with the endorsement exceeds arrangements. The plaintiff therefore has instituted criminal proceedings under Section 138 of the Negotiable Instruments Act before the Judicial Magistrate No. II, Erode, in C.C. No. 584 of 2004, in respect of one of the cheques, namely cheque No. 133123 dated 23.12.2003.

4. The plaintiff therefore made demands for the payment on the defendants, however there was no response from them. Thereafter, the plaintiff had issued legal notices dated 04.06.2004 for each of the cheques drawn in the name of the 2nd and 3rd defendants, respectively. The notices were served on the 1st defendant who, however did not respond to the same either by sending a reply or by making the payment. Therefore, the plaintiff is constrained to file the above suit.

Written Statement of the 1st Defendant in O.S. No. 48 of 2007:

5. The 1st defendant had denied the allegation contained in the Plaint. They had taken out a preliminary objection that the plaintiff is not a registered firm and further that Mr. K. Venkatesan who has been described as a partner representing the plaintiff firm was not a partner of that firm. The defendant had denied the fact that he would discount his own cheques with the 2nd and 3rd defendants. The 1st defendant also contended that they had nothing to do with the defendants 2 and 3. It is also the case of 1st defendant that there was no direct transaction between the plaintiff and the 1st defendant and he would further contend that the plaintiff had to pr