Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2020 Supreme(Sikk) 32

IN THE HIGH COURT OF SIKKIM : GANGTOK
ARUP KUMAR GOSWAMI, J.
Ms. Dinku Khati, Daughter of late Tek Bahadur Khati - Appellant
Versus
Smt. Kamal Kumari Subba, Wife of Shri Ashok Kumar Subba (Tsong) - Respondent
RFA No. 03 of 2019
Decided On : 24-03-2020

Advocates Appeared:
For the Appellant :Ms.Gita Bista, Advocate.
For the Respondent:Mr. Vivek Anand Basnett, Advocate.

The plaintiff must provide credible evidence to support loan transactions, and the burden of proof lies with the plaintiff.

Headnote:
Loan - Recovery Suit - SARFAESI Act, 2002 - Hand Note dated 16.07.2013 - Section 13(2) of SARFAESI Act - Money Suit No. 14 of 2015 - Summary of Acts and Sections: SARFAESI Act, 2002, Section 13(2) - The court discussed the plaintiff's claim of advancing loans to the defendant, the lack of evidence to support the loan transactions, and the discrepancies in the Hand Note dated 16.07.2013. The court highlighted the importance of proving loan transactions and the need for credible evidence to support the plaintiff's claims.
Fact of the Case:

The plaintiff, a practicing Advocate, filed a suit against the defendant for recovery of a loan amount of Rs.32,47,200 along with interest. The plaintiff claimed to have advanced various loans to the defendant for different purposes, but the defendant denied receiving any such loans. The trial court held that the plaintiff failed to prove the loan transactions and dismissed the suit.
Finding of the Court:

The court found that the plaintiff failed to provide credible evidence to support the loan transactions and the Hand Note dated 16.07.2013. The court emphasized the importance of proving loan transactions and held that the plaintiff had failed to prove her case.
Issues: The main issues were whether the defendant was liable to pay the claimed amount to the plaintiff and the relief, if any.
Ratio Decidendi: The plaintiff must succeed on the strength of her own evidence, and the burden of proving loan transactions lies with the plaintiff. Mere admission of documents does not amount to their proof, and the contents of documents must be proved with credible evidence. Expert evidence, though relevant, is not conclusive and cannot replace substantive evidence.
Final Decision: The appeal was dismissed, and the court found no merit in the plaintiff's case.

Judgement Key Points

Key Points: - The plaintiff must provide credible evidence to support loan transactions (!) (!) . - Mere admission of documents does not amount to proof; contents must be proved with credible evidence (!) (!) . - The burden of proving loan transactions lies with the plaintiff (!) (!) . - Expert evidence is not conclusive and cannot replace substantive evidence (!) (!) . - The plaintiff failed to prove the contents of the Hand Note despite producing it (!) (!) . - The plaintiff could not reconcile discrepancies in the Hand Note and failed to explain the source of funds (!) (!) . - The trial court correctly dismissed the suit as the plaintiff failed to prove her case (!) (!) . - No cost is awarded (!) . - The appeal is dismissed for lack of merit (!) . - Lower court records to be sent back (!) .

What is the burden of proof for loan recovery claims?

How to prove loan transactions in a recovery suit?

What is the sufficiency of documentary evidence in loan disputes?

JUDGMENT :

This appeal is preferred by the plaintiff against the judgment and decree dated 27.02.2019 passed by the learned District Judge, East Sikkim at Gangtok, in Money Suit No. 14 of 2015, dismissing the suit of the plaintiff, whereby recovery of Rs.32,47,200/- was prayed for along with interest of 18% from date of filing till final execution.

2. The case of the plaintiff, in a nutshell, as projected in the plaint is as follows:

(i) The plaintiff, who is a practicing Advocate, was introduced to the defendant by the husband of the defendant, Mr. Ashok Kumar Subba (Tsong), in the year 2009 and she had rendered legal assistance to the husband of the defendant and his other family members. Husband of the defendant had started a company in the name of M/s Zingtang Consultancy & Service Pvt. Ltd. and she had accepted the post of Legal Advisor in that company. It is pleaded that the defendant had approached the plaintiff in and around August, 2009 for a loan of Rs.2,00,000/- for the purpose of payment of fees of the daughter of the defendant who was studying in Australia with a promise to repay the loan within two months. With much difficulty, the plaintiff managed to collect the said amount and delivered the same to the defendant without executing any document. Though the plaintiff had asked for repayment of the loan after two months, the amount was not paid. Nevertheless, the plaintiff arranged one rented flat belonging to one Nima Gurung at Siliguri for the defendant and her family members to stay at Siliguri.

(ii) In respect of default of payment of loan of Rs.90,00,000/- taken by the defendant from the United Bank of India, Deorali Branch, a notice under Section 13(2) of SARFAESI Act, 2002 was issued to the defendant as well as to her husband, who was the guarantor and an amount of Rs.18,41,540/- was paid by Mr. Ashok Kumar Subba (Tsong) from the account of the company towards loan repayment. The bank loan dues of the defendant mounted to Rs.1,42,00,000/- and to save the property, the defendant requested the plaintiff to manage a loan of Rs.6,00,000/- which she stated would be paid with interest along with Rs.2,00,000/- taken earlier. It is the further case of the plaintiff that she mortgaged a plot of land along with two dwelling flats belonging to her late father, namely, Tek Bahadur Khati to one Chandra Bhusan Tiwari for Rs.6,00,000/- which was to be repaid by her within a period of six months. The plaintiff paid the defendant the amount of Rs.6,00,000/- in two installments: one of Rs.5,00,000/- on 25.05.2011 and the other a sum of Rs.85,000/- out of Rs.1,00,000/- on 22.12.2011 after deducting 15% interest at the source itself. The defendant, despite approaches made by the plaintiff, did not repay the loan with interest accrued thereon forcing the plaintiff to borrow money from her brothers, namely, Mr. Amit Khati and Mr. Manish Khati, to pay the accrued interest.

(iii) A Possession Notice as well as a Sale Notice dated 26.03.2012 were served on the defendant on 23.02.2012 by the Bank in connection with the loan taken by the defendant and in the aforesaid situation, the defendant approached the plaintiff expressing her inability to repay the loan and to protect the building constructed by her husband before the Debt Recovery Tribunal, the defendant had taken a loan from the plaintiff amounting to Rs.6,79,000/-. It is pleaded that the plaintiff paid the aforesaid amount from the amount received by her by cheque dated 10.04.2012 from one of her clients, namely, Ashok Lama.

(iv) A sum of Rs.35,000/- was also stated to be paid by the plaintiff by cash and another sum of Rs.5,000/- was deposited in the account of Mr. Yehang Subba, son of the defendant, on 20.04.2012, on being requested by the defendant when her son had gone to Delhi for his treatment of Tuberculosis.

(v) The plaintiff also stated to have mortgaged her gold ornaments for a sum of Rs.2,45,305/- to safeguard the property of the defendant and handed over the said amount

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