A.S.No.229 of 2017

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 14.02.2023

CORAM

THE HONOURABLE MR. JUSTICE S.M.SUBRAMANIAM

A.S.No.229 of 2017

M/s.Sree Gokulam Chits & Finance Co., (P) Ltd.,

Represented by its Director-Operations

V.C.Praveen,

No:66, Arcot Road,

Kodambakkam,

Chennai – 600 024.

..Appellant

Vs.

1.Nagabhushanam.P

2.Mrs.Mrunalini.P

..Respondents

Appeal filed under Section 96 of Civil Procedure Code Read with

Order 41 & 41A CPC., praying to set aside the Judgment and the Decree

dated 15.12.2016 passed in O.S.No.52 of 2015 by the Hon'ble XIX

Additional City Civil Court, Chennai.

For Appellant

: Mr.L.Rajasekar

For Respondents : No appearance

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A.S.No.229 of 2017

JUDGMENT

The Appeal Suit has been filed to set aside the Judgment and the

Decree dated 15.12.2016 passed by the XIX Additional City Civil Court,

Chennai.

2. The plaintiff is the appellant, instituted a suit for recovery of money

based on the Promissory Note. The plaintiff is M/s.Sree Gokulam Chits &

Finance Company Private Limited, represented by its Director (Operations),

which is a company registered under the Companies Act.

3. The suit was instituted to recover a sum of Rs.24,59,283/- towards

loan amount and the interest at the rate of 18% per annum from 01.04.2014

to 30.11.2014 based on the Promissory Note, Ex.A3 dated 20.12.2011.

4. Plaint averments reveal that the defendants had borrowed a sum of

Rs.15,00,000/- at the office of the plaintiff at Kodambakkam, Chennai and

both the defendants have jointly executed a Promissory Note on 20.12.2011.

The defendants had agreed to repay the said amount on demand together

with compound interest at the rate of 18% per annum. The defendants were

irregular in payment of the interest and committed default. The defendants

had remitted a sum of Rs.40,000/- by cash on 03.03.2012 and the same was

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A.S.No.229 of 2017

credited to the defendant's account. Plaintiff made demands to repay the

loan, which was neglected by the defendants and thus, the plaintiff issued a

legal notice on 05.12.2014 and thereafter, instituted suit for recovery of

money.

5. The defendants denied the plaint averments by stating that the

plaintiff company is not authorized to do finance business of lending money

to any loanee. Thus, the suit is to be dismissed in limine. Defendants never

borrowed a sum of Rs.15,00,000/- by executing a suit Promissory Note

allegedly executed on 20.12.2011. The defendants had not executed any

such Promissory Note jointly on 20.12.2011 or agreed to repay the said

amount at the rate of 18% interest per annum. Non-Banking finance

companies are prohibited to recover the interest at compound rate either

monthly or yearly rest. Defendants further denied the allegations raised in

the complaint and contended that for fabricating the loan account and by

interpolating an amount of Rs.40,000/- was entered as if remitted by the

defendants.

6. At the outset, the defendants denied the Execution of Ex.A3,

Promissory Note. The plaintiff already filed A.R.C.No.742 of 2014 against

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A.S.No.229 of 2017

the same defendants before the Arbitrator for Central Chennai Chit Fund

cases Court. The first defendant joined in the Chit conducted by the plaintiff

company in Secunderabad Branch, Vide Chit Series G2L 385 ticket No.16

for the value of Rs.25,00,000/- dated 06.08.2011, which was ended on

06.03.2013. Meanwhile, the first defendant received an amount of

Rs.18,74,900/- from the plaintiff, which was reflected in the Statement of

Accounts of the Indian Overseas Bank, Rashtrapati Road, Secunderabad.

The first defendant was also a member in another chit in the plaintiff

company at Secunderabad Branch in G2L/465/12 dated 05.12.2011 for

Rs.25,00,000/-. The first defendant participated in the Chit Auction and

bec