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Monday, December 30, 2013

Mortgage suit Or. 34 Rule 11 C.P.C.- Banker's Book Evidence Act - Appeal against preliminary decree after passing final decree - Reduction of suit claim by wrongly rejecting statement of account as per Banker's Book Evidence Act -Court has got jurisdiction to scaled down the interest of Plaintiff's Bank - Bank can maintain appeal over the preliminary decree even after passing of final decree - High court partly allowed the Appeal = State Bank of India Settipalle Branch, Tirupati, Chittoor District, Rep. by its Chief Manager...... Appellant P. Veeranarayana, S/o.P.Veeraswamy Naidu, Hindu, aged about 49 years, Occ: Business, Managing Director o M/s.Siubar Auto Parts Limited, Sattipalle, Tirupati...... Respondent = Published in judis.nic.in/judis_andhra/filename=10295

 Mortgage suit Or. 34 Rule 11 C.P.C.- Banker's Book Evidence Act - Appeal against preliminary decree after passing final decree - Reduction of suit claim by wrongly rejecting statement of account as per Banker's Book Evidence Act -Court has got jurisdiction to scaled down the interest of Plaintiff's Bank - Bank can maintain appeal over the preliminary decree even after passing of final decree - High court partly allowed the Appeal =

Sections 2(3) and 4 of the Banker's Book Evidence Act provides as follows:

"2(3). "banker's books" include ledgers, day-books, cash-books, account-books,
and all other records used in the ordinary business of a bank, whether these
record are kept in the written form or stored in a micro film, magnetic tape or
in any other form of mechanical or electronic date retrieval mechanism, either
onsite or at any offsite location including a back-up or disaster recovery site
of both"
...

4. Mode of proof of entries in banker's books.- Subject to the provisions of
this Act, a certified copy of any entry in a banker's book shall, in all legal
proceedings, be received as prima facie evidence of the existence of such entry,
and shall be admitted as evidence of the matters, transactions, and accounts
therein recorded in every case where, and to the same extent as, the original
entry itself is now by law admissible, but not further or otherwise."=

State Bank of India (for short 'the Bank') filed the aforesaid suit based
on mortgage against the respondent (hereinafter referred to as 'Borrower'),
relating to housing loan of Rs.5.5 lakhs granted to the borrower. 
Claiming that the borrower is due and liable to pay a sum of Rs.7,12,889.41 ps. together with
interest at 13.77% per annum with quarterly rests from the date of suit
(23.07.2000), the bank filed the aforesaid suit. The said suit had been decreed
by the trial Court for a suit claim of Rs.4,14,337/- and it also granted simple
interest at 12% per annum from the date of suit. The trial Court, however,
did not accept the entries shown in Exs.A6 and A13, which are certified copies
of loan ledger extract and extract of arrears of account respectively and found
that Rs.2,74,051.97 ps. has been wrongly not given credit to and consequently,
reduced the suit claim to Rs.4,14,337.44 ps. and granted simple interest at 12%
per annum on the said amount. Thus, the bank is, in appeal, aggrieved by order
of the trial Court disallowing part of the suit claim and denying the
contractual rate of interest.
Thus, aggrieved by the
disallowed suit claim as well as granting simple interest at 12% per annum as
against the contractual rate claimed in the suit, this appeal is preferred by
the bank.=
After passing of final decree also ,  an Appeal is maintainable over the preliminary decree =

From the above, it would be clear that there is no rebuttal evidence on
behalf of the borrower to rebut the statutory presumption of correctness
attached to Exs.A6 and A13. 

21.     As noted above, both Exs.A6 and A13 are certified as required under the
aforesaid provision. I, therefore, see no impediment to accept the outstanding
amount shown thereunder as correct. The trial Court, therefore, was not
justified in reducing the suit claim than what is mentioned in the said
document. The finding of the trial Court on the said issue No.4 reducing the
suit claim of the bank is, therefore, liable to be set aside and is accordingly
set aside. It is, however, to be noted, as per P.W.1's statement extracted
above, that a sum of Rs.24,500/- paid by the defendant subsequent to Ex.A6 is
required to be given credit to in the suit claim. Hence, in modification of the
decree of the trial Court, the suit claim shall stand decreed for
Rs.7,12,889.41/- - Rs.24,500/- = Rs.6,88,389.41/-.
Undoubtedly, the Supreme Court in N.M. VEERAPPA's case     
(3 supra) categorically held that the civil Court has discretion under Order 34
Rule 11 CPC to reduce the rate of interest depending on the facts and
circumstances of each case. The circumstances, as pointed out by the learned
counsel for the borrower, being not in dispute,
I am not inclined to interfere with the discretion exercised by the trial Court
and as such, the interest at 12% granted by the trial Court is affirmed.

        Point No.2 is accordingly answered against the appellant-bank.


25.     In the result, the decree of the trial Court stands modified as under:

1. The suit claim of Rs.6,88,389.41 ps. shall carry simple interest at 12% from
the date of suit till realization.

2. The appellant - bank shall also give due credit to the amounts, if any, paid
by the borrower subsequent to the final decree dated 07.08.2003.

3. The trial Court is directed to pass a fresh final decree in terms of this
decree and such final decree to be passed by the trial Court would stand
substituted for the final decree passed by the trial Court in I.A.No.1478 of
2002 dated 07.08.2003. 

The appeal is accordingly allowed in part.

THE HON'BLE SRI JUSTICE VILAS V. AFZULPURKAR        

APPEAL SUIT No.176 OF 2004    

Dated :04-09-2013

State Bank of India Settipalle Branch, Tirupati, Chittoor District, Rep. by its
Chief Manager...... Appellant

P. Veeranarayana, S/o.P.Veeraswamy Naidu, Hindu, aged about 49 years, Occ:  
Business, Managing Director o M/s.Siubar Auto Parts Limited, Sattipalle,
Tirupati...... Respondent

Counsel for Appellant:  Mr. M. Narender Reddy

Counsel for Respondent:Mr. T.V.L. Narasimha Rao

<GIST   :

>HEAD NOTE :  

?Cases referred :
1. AIR 1967 SC 1236
2. AIR 1999 SC 896
3. (1998) 2 SCC 317


The Court made the following: -

JUDGMENT:  


        State Bank of India, which is plaintiff in O.S.No.25 of 2000 on the file
of the III Additional District Judge, Tirupati, has filed this appeal to the
extent of disallowed claim by the trial Court under judgment dated 22.03.2002.

2.      State Bank of India (for short 'the Bank') filed the aforesaid suit based
on mortgage against the respondent (hereinafter referred to as 'Borrower'),
relating to housing loan of Rs.5.5 lakhs granted to the borrower. 
Claiming that
the borrower is due and liable to pay a sum of Rs.7,12,889.41 ps. together with
interest at 13.77% per annum with quarterly rests from the date of suit
(23.07.2000), the bank filed the aforesaid suit. The said suit had been decreed
by the trial Court for a suit claim of Rs.4,14,337/- and it also granted simple
interest at 12% per annum from the date of suit. Thus, aggrieved by the
disallowed suit claim as well as granting simple interest at 12% per annum as
against the contractual rate claimed in the suit, this appeal is preferred by
the bank.

3.      I have heard Mr. M. Narender Reddy, learned counsel for the bank and Mr.
T.V.L. Narasimha Rao, learned counsel for the borrower. Both the learned counsel
have elaborately made submissions with reference to their respective claim on
the basis of documents,
which primarily comprise of statement of accounts, exhibited in the suit. The
bank as well as the borrower have produced additional documents requesting to
receive them as additional evidence, reference to which would made at an
appropriate place.
4.      Before going into the merits of the claim of the bank in the appeal, it is
necessary to deal with a preliminary objection of maintainability of the appeal
raised by the borrower.

PRELIMINARY OBJECTION:    


5.      Mr. T.V.L. Narasimha Rao, learned counsel for the borrower, contended that
the present appeal is filed against the preliminary decree granted by the trial
Court on 22.03.2002 in the mortgage suit aforesaid. Based on the said
preliminary decree the bank has filed an application for grant of final decree
in I.A.No.1478 of 2002 on 07.10.2002 requesting the trial Court to pass a final
decree in terms of the said preliminary decree on the ground that the redemption
was not availed by the borrower. The said final decree application was allowed
by the trial Court by passing a final decree dated 07.08.2003. Learned counsel,
therefore, states that, in the meanwhile, the bank had filed the present appeal
on 24.06.2002 questioning the preliminary decree and that the filing of the
final decree application and passing of the final decree was never disclosed
while filing the present appeal. Learned counsel also submits that though this
appeal was filed on 24.06.2002, it was retuned with certain office objections on
06.08.2002 but was not represented within time and the application seeking
condonation of delay of 1196 days in representing the appeal in CMP.No.22784 of
2003 was ordered only on 07.01.2004 and it is only thereafter the appeal was
numbered and admitted on 28.06.2004 and only thereafter notice in this appeal
was served on the borrower.

6.      Learned counsel for the borrower, therefore, submits that having accepted
the preliminary decree, which is impugned herein and having sought a final
decree to be passed in pursuance thereafter and having secured a final decree as
early as on 07.08.2003, the bank is estopped from pursuing this appeal against
the preliminary decree,
as it cannot be allowed to blow hot and cold. Learned counsel, further, submits
that the filing and prosecution of this appeal by the bank is also not bonafide,
as they never disclosed filing of this appeal in the application filed by them
for final decree. Thus, in view of passing of the final decree, the preliminary
decree merges in the later decree and on that ground also the present appeal is
not maintainable.

7.      Mr. M. Narender Reddy, learned counsel for the bank, submits that there is
no impediment for maintainability of the present appeal inasmuch as this appeal
was presented on 24.06.2002 long before the final decree application was filed.
Learned counsel submits that,
no doubt, there was delay in representing the appeal when the office raised
objections but since the said delay was condoned, the time for representation
stands extended and thereafter, the appeal has been duly numbered and admitted.
Learned counsel submits that even though the bank is aggrieved to the extent
disallowing of its suit claim in entirety, while passing the preliminary decree,
to the extent of the decreed suit claim there was no impediment for the bank in
seeking final decree. Learned counsel also submits that if the bank waited for
the result of this appeal, it could not have recovered even the suit claim
covered by the preliminary decree and there was no reason,
in law, disabling the bank from seeking final decree on the basis of preliminary
decree pending appeal against the preliminary decree.  Learned counsel relied
upon a decision of the Supreme Court in
SITAL PERSHAD v. KISHORI LAL1 which has considered similar question and held  
that, in such circumstances, the appeal is maintainable.

8.      In order to decide the said preliminary objection, it would be appropriate
to notice the relevant facts in the aforesaid decision.
The appellant before the Supreme Court suffered a preliminary decree in a
mortgage suit. However, the interest, as claimed by the respondent, was not
decreed and to that extent, the respondent had filed an appeal before the High
Court. Meanwhile, the respondent applied for passing of final decree, which
application was allowed and thereafter, the respondent took out the execution of
the said final decree. Meanwhile, the appeal filed by the respondent to the
extent of disallowed claim, was allowed by the High Court. Based on the said
subsequent event, the appellant objected to the execution of final decree
earlier passed in view of subsequent modification of preliminary decree. The
executing Court, however, rejected the said objection and out of that the matter
reached the Supreme Court. The Supreme Court held at para 5 as under: 

The question before us in the present appeal therefore is which of these two
views is correct. Before we consider this question   we may state certain well-
settled propositions with respect to preliminary and final decrees in mortgage
suits and the effect of an appellate decree in general on the decree of the
trial court. Generally speaking, the decree of the appellate court supersedes
the decree of the trial court even when it confirms that decree and therefore it
is well-settled that only the appellate court can amend the decree thereafter:
[see Muhammad Sulaiman Khan v. Muhammad Yar Khan (1888) ILR All 267 (FB)]It is    
equally well-settled that where an appeal has been taken from a preliminary
mortgage decree and is decided, the time for preparation of final decree is
three years from the date of the appellate decree even though the appellate
court may not have extended the time for payment provided in the        preliminary
decree, where no final decree has been prepared in between :    see Jowad 
Hussain v. Gendan Singh, 53 Ind App 197 : (AIR 1926 PC 93). This applies even to
a case where the decree of the appellate court is made more than three years
after the time fixed for payment in the preliminary decree :
[see Fitzholmes v.
Bank of Upper India, 54 Ind App 52 : (AIR 1927 PC 25). Further it is well-
settled that the mere fact      that there is an appeal from a preliminary decree
does not oust the jurisdiction of the trial court to prepare a final decree even
while the appeal is pending unless there is a stay order :
[see Sat Prakash v.
Bahal Rai ILR 53 All 282 : (AIR 1931 All 386 (FB)]. Even if a final decree has
been passed an appeal from a preliminary decree is not incompetent and it is not
necessary for a party to appeal both from the preliminary decree and the final
decree in order to maintain his appeal against the preliminary decree.
In such a case where the preliminary decree is set aside the final decree is
superseded whether the appeal is brought before or after the passing of the
final decree : 
[see Talebali v. Abdul Aziz, ILR 57 Cal 1013 : (AIR 1929 Cal 689
(FB)]. Further it was observed in the last case that where an appellate court
sets aside or varies a preliminary decree it can, and indeed could, give
        direction for the setting aside or varying of the final decree, if the
existence of the final decree is brought to its notice as in all cases it ought
to be."

[Emphasis supplied]

        The legal position, therefore, is conclusively answered by the aforesaid
passage, particularly, the emphasized portion and in view of that the
preliminary objection raised by the learned counsel for the borrower is liable
to be rejected and is accordingly rejected.

9.      The brief facts of the case are as follows:

        (a) As stated above, the bank had sanctioned a housing loan for Rs.7 lakhs
to the borrower but the actual amount disbursed was
Rs.5.5 lakhs. The said amount was repayable in 168 monthly installments at
equated monthly installments (EMI) of Rs.7,150/- per month with effect from
31.03.1996. It is pleaded in the plaint that to secure such loan with interest
at 17.25% with quarterly rests, agreed upon, the borrower created an equitable
mortgage by deposit of title deeds. As per the terms of the loan, when the
outstanding against loan was not paid in spite of repeated demands, a legal
notice, Ex.A7 dated 16.06.2000, was issued and served on the borrower under
acknowledgment, Ex.A8 and thereafter, the present suit was filed on 23.07.2000.

        (b) The borrower filed a written statement denying the suit claim and
disputed the amount claimed, as outstanding. It was also stated that the EMI's
were paid by the borrower and recovered and
in fact, from October 1998 onwards the borrower paid ad hoc amounts of
Rs.14,000/- per month to clear off the loan at an early date.
It is also stated that though the legal notice was replied under reply dated
03.07.2000, the suit is filed without referring thereto.
The borrower had also claimed that he had paid excess amount on Rs.1.04 lakhs,
as such, the suit claim is not tenable and there is no cause of action for the
suit.

10.     On the aforesaid pleadings, the trial Court framed the following issues:
1. Whether the defendant availed loan of Rs.5,50,000/- from the plaintiff bank
and agreed to pay the amount in 180 equal monthly installments and executed term
loan agreement on 31.3.95 and a letter dt.31.3.95?

2. Whether the defendant deposited title deed and created an equitable mortgage
and executed From A letter of deposit of title deed on 3.4.95 in favour of
Plaintiff Bank?

3. Whether the defendant executed a revival letter on 28.1.98 acknowledging his
liability and whether the suit is within limitation?

4. Whether the defendant paid the amount to the plaintiff as per the E.M.I fixed
by the Plaintiff?

5. To what relief?

11.     On behalf of the bank, P.W.1, Assistant Manager of the Bank was examined
whereas the borrower examined himself as D.W.1.
On behalf of the bank, the loan documents were marked as Exs.A1 to A13 whereas
no documentary evidence is produced and marked on behalf of the borrower.

12.     While answering issues 1, 2 and 3 in favour of the bank,
the trial Court has recasted issue No.4. The trial Court, however,
did not accept the entries shown in Exs.A6 and A13, which are certified copies
of loan ledger extract and extract of arrears of account respectively and found
that Rs.2,74,051.97 ps. has been wrongly not given credit to and consequently,
reduced the suit claim to Rs.4,14,337.44 ps. and granted simple interest at 12%
per annum on the said amount. Thus, the bank is, in appeal, aggrieved by order
of the trial Court disallowing part of the suit claim and denying the
contractual rate of interest.

13.     Based on the aforesaid, the points for consideration in the appeal are:

1. Whether the finding of the trial Court in not accepting Exs.A6 and A13 is
justified?

2. Whether denying contractual rate of interest in a suit for mortgage is
justified?

14.     Before answering the questions, as above, it is necessary to deal with
ASMP.No.1685 of 2013, filed by the borrower, requesting this Court to receive
the Recalculated Housing Loan Account Statement; Recast Notional Housing Loan  
Arrears Account and Letter dated 23.04.2013, as additional evidence. The
documents filed along with the said application and letter received by the
borrower under the Right to Information Act, are, therefore, sought to be filed
as additional evidence.  So far as the account statement calculated by the
borrower is concerned, apparently, it is a self-serving document,
for the statement is signed by the borrower and his counsel. In law, therefore,
such self-serving calculation sheet, as against the claim of the bank based on
certified account statement cannot be sustained.  The said statement of accounts
described as recalculated housing loan account statement and recast notional
housing loan arrears account have no evidentiary value and cannot be received in
evidence.
Further, the letter of the bank issued to the borrower counsel under RTI Act
merely gives details of loan disbursed date-wise and the payment made by the
borrower date-wise are of no assistance, as all those aspects are not in
controversy. I am, therefore, not inclined to order the said application and the
same is accordingly dismissed.

15.     Similarly, the appellant-bank had filed ASMP.No.2343 of 2004 requesting
the Court to receive the consolidated statement of account as additional
evidence. It is stated that the said consolidated statement is prepared merging
Exs.A6 and A13 and the said statement is signed by the Chief Manager of the
Bank.  Firstly, the said document is prepared by, allegedly, consolidating
Exs.A6 and A13 and as such, the said document is not a statement of account
maintained by the bank in usual course of business nor the said document is
certified as required under Section 3 of the Banker's Books Evidence Act and as
such, the said document is also not admissible. The miscellaneous petition is
accordingly rejected.

POINT No.1:


16.     A look at the pleadings of the parties would show that there is no
controversy with regard to raising of the loan, its quantum, equitable mortgage
and the terms and conditions of the said loan.  Ex.A12 filed on behalf of the
bank contains the terms and conditions of the said loan dated 22.05.1995 and
under Ex.A5, admittedly,
the borrower has given letter of revival of the said loan on 21.01.1998.
Further, the said claim is based on Ex.A6, ledger extract and Ex.A13, copies of
arrears account. I have seen the original documents, both of which have been
certified as required under the Bankers Book of Evidence Act. In the absence of
any rebuttal evidence, therefore,
a statutory presumption arises in support of the said two documents with respect
to the correctness of entries therein.

17.     Learned counsel for the respondent, however, disputed the very document
Ex.A13 by contending that the said document was not referred to in the pleadings
nor filed along with plaint but has been filed subsequently when P.W.1 was being
examined. According to the learned counsel, there cannot be two separate
accounts maintained by the bank and according to him, Ex.A6 alone reflects the
true accounts position and no reliance can be placed on Ex.A13.

18.     Learned counsel for the bank, however, submits that both the said accounts
are required to be maintained by the bank as per instructions of the Reserve
Bank of India and for every loan account, the arrears account and the ledger
account are separately maintained and he submits that though the plaint, by
mistake, does not refer to Ex.A13, that by itself is no ground to reject the
said document.

19.     It is not in dispute that the suit claim of the bank is based upon Exs.A6
and A13 and P.W.1 states in his evidence that 'Each loan account of our bank
will be maintained under two separate heads,
for the convenience of computer processing. Under the first head all the
disbursements made to the borrower by the Bank will be shown.
In the other head, amounts due by the borrower, monthly installments due and
interest accrued thereon will be shown ... The amount shown under Ex.A13 is
reflected under Ex.A6 already. In Ex.A6 the schedule repayable amounts are only
shown by way of installment. But they are not actual payments, made by the
defendant. In Ex.A6, the actual amount due on 23.07.2000 (date of suit) is
shown. Subsequent to, the filing of the suit defendant paid an amount of
Rs.24,500/- in two installments and plaintiff has no objection for deducting
that amount from the suit amount". A suggestion given to P.W.1 may also be
noticed, which says, "It is not true to say that Ex.A13 does not reflect true
facts as we have not produced the original ledgers before the Court." In this
context, defendant, D.W.1, states in cross-examination dated 17.04.2011 as
follows: "The payment made by me mentioned in the ledger, are correct. A6 is the
ledger extract". Regarding Ex.A3, however, he did not make any statement.

20.     Sections 2(3) and 4 of the Banker's Book Evidence Act provides as follows:

"2(3). "banker's books" include ledgers, day-books, cash-books, account-books,
and all other records used in the ordinary business of a bank, whether these
record are kept in the written form or stored in a micro film, magnetic tape or
in any other form of mechanical or electronic date retrieval mechanism, either
onsite or at any offsite location including a back-up or disaster recovery site
of both"
...

4. Mode of proof of entries in banker's books.- Subject to the provisions of
this Act, a certified copy of any entry in a banker's book shall, in all legal
proceedings, be received as prima facie evidence of the existence of such entry,
and shall be admitted as evidence of the matters, transactions, and accounts
therein recorded in every case where, and to the same extent as, the original
entry itself is now by law admissible, but not further or otherwise."

        From the above, it would be clear that there is no rebuttal evidence on
behalf of the borrower to rebut the statutory presumption of correctness
attached to Exs.A6 and A13. 

21.     As noted above, both Exs.A6 and A13 are certified as required under the
aforesaid provision. I, therefore, see no impediment to accept the outstanding
amount shown thereunder as correct. The trial Court, therefore, was not
justified in reducing the suit claim than what is mentioned in the said
document. The finding of the trial Court on the said issue No.4 reducing the
suit claim of the bank is, therefore, liable to be set aside and is accordingly
set aside. It is, however, to be noted, as per P.W.1's statement extracted
above, that a sum of Rs.24,500/- paid by the defendant subsequent to Ex.A6 is
required to be given credit to in the suit claim. Hence, in modification of the
decree of the trial Court, the suit claim shall stand decreed for
Rs.7,12,889.41/- - Rs.24,500/- = Rs.6,88,389.41/-.

        Point No.1 is accordingly answered in favour of the appellant.


Point No.2:


22.     With regard to the claim for interest by the bank, as per the contractual
rate, as claimed in the suit is concerned, Mr. M. Narender Reddy, learned
counsel for the bank, placed reliance upon a decision of the Supreme Court in
STATE BANK OF INDIA v. YASANGI VENKATESWARA RAO2 and it is contended that          
entering into a mortgage is a matter of contract between the parties and if the
parties agree that in respect of the amount advanced against a mortgage compound
interest will be paid, the Court cannot interfere and reduce the amount of
interest agreed to be paid on the loan so taken.  Learned counsel, therefore,
submits that considering Section 21-A of the Banking Regulation Act, the Supreme
Court held that charging compound interest as per the agreement cannot be said
to be excessive and cannot be reduced.

23.     Per contra, learned counsel for the borrower placed strong reliance upon a
decision of the Supreme Court in N.M. VEERAPPA V. CANARA BANK3,  which held        
that the Court has discretion under Order 34 Rule 11 of the Code of Civil
Procedure, 1908, to order payment of interest at a rate lower than the
contractual rate.
The provisions of Section 21-A of the Banking Regulation Act were also
considered in the aforesaid decision but it was held that the said provision
does not intend to override CPC and particularly, Order 34 Rule 11 CPC.  Hence,
the power of the civil Court to reduce the rate of interest from the date of
suit is not affected. 
In furtherance of the said proposition, the learned
counsel submits that the borrower has been bonafide and he had paid EMI's
regularly from 01.04.1996 to 01.05.2000, as admitted by P.W.1. In addition, the
borrower paid Rs.1,28,900/- between 20.10.1997 and 04.05.2000 and in addition
thereto, further sum of Rs.24,500/- was paid after filing of the suit.
All this, therefore, shows that the borrower has been fair while dealing with
the bank but the appellant-bank has not been equally fair to the borrower.
Learned counsel, therefore, submits that the trial Court exercised discretion
under Order 34 Rule 11 CPC and granted simple interest at 12%. He, therefore,
urges that this Court would not interfere with that part of the discretion
exercised by the trial Court looking at the bonafides of the borrower.

24.     Undoubtedly, the Supreme Court in N.M. VEERAPPA's case    
(3 supra) categorically held that the civil Court has discretion under Order 34
Rule 11 CPC to reduce the rate of interest depending on the facts and
circumstances of each case. The circumstances, as pointed out by the learned
counsel for the borrower, being not in dispute,
I am not inclined to interfere with the discretion exercised by the trial Court
and as such, the interest at 12% granted by the trial Court is affirmed.

        Point No.2 is accordingly answered against the appellant-bank.


25.     In the result, the decree of the trial Court stands modified as under:

1. The suit claim of Rs.6,88,389.41 ps. shall carry simple interest at 12% from
the date of suit till realization.

2. The appellant - bank shall also give due credit to the amounts, if any, paid
by the borrower subsequent to the final decree dated 07.08.2003.

3. The trial Court is directed to pass a fresh final decree in terms of this
decree and such final decree to be passed by the trial Court would stand
substituted for the final decree passed by the trial Court in I.A.No.1478 of
2002 dated 07.08.2003. 

The appeal is accordingly allowed in part. As a sequel,
the miscellaneous applications, if any, shall stand dismissed.
There shall be no order as to costs.
____________________  
VILAS V. AFZULPURKR, J  
September 4, 2013

Wednesday, December 25, 2013

Sec.138 ,sec.141 N.I.Act - Partnership Firm - issued cheque - cheque bounced - firm not made as accused - fatal to the prosecution - firm registration form filed by accused can be considered even at preliminary stage against the general rule no document filed by accused can be considered - no issue of reply notice is not fatal for receiving the document filed by accused - complaint was quashed as not maintainable = Smt. Bommidipati Madhavi....Petitioner/accused The State of Andhra Pradesh rep.by Public Prosecutor, High Court of A.P., Hyderabad and another....Respondents = published in judis.nic.in/judis_andhra/filename=10600

Sec.138 ,sec.141 N.I.Act - Partnership Firm - issued cheque - cheque bounced - firm not made as accused - fatal to the prosecution -  firm registration form  filed by accused can be considered even at preliminary stage against the general rule no document filed by accused can be considered - no issue of reply notice is not fatal for receiving the document filed by accused - complaint was quashed as not maintainable =
On repeated demands, the
petitioner is alleged to have issued a cheque bearing No.000174, dated
10.11.2011 in favour of the 2nd respondent drawn on Union Bank of India,
Chandram Palem, Madhurawada, Visakhapatnam in discharge of the said debt.
The   
said cheque when presented was returned with an endorsement "insufficient
funds". After complying with the statutory requirements, the present complaint
came to be filed before the Court of Chief Metropolitan Magistrate, at
Bheemunipatnam, Visakhapatnam district and the same was taken on file as  
C.C.No.170 of 2012. =
the
goods were supplied to a partnership firm  and initiation of proceedings without
making the firm as an accused is bad in law.  =

whether the firm is a necessary party when the cheque was issued on behalf of firm ?
When once it is established,  that it is a partnership
firm and the cheque was issued by the managing partner of a firm, arraying the
firm as an accused is necessary.
In view of the judgment of the Apex Court in
Aneeta Hada's case, wherein a three judge Bench of the Apex Court, while
overruling the view taken 
in Sheoratan Agarwal v. State of M.P.6, and clarifying judgment in Anil Hada v. Indian Acylic Ltd7
held that for maintaining a
prosecution under Section 141 of the Act, arraying of a company as an accused is
imperative and other categories of offenders can only be brought in the drag-net
on the touchstone of vicarious liability as stipulated in the provisions.

whether the documents filed by the accused can be looked into  for consideration ?
in Harshendra Kumar D. v. Rebatilata
Koley8 
wherein the Apex Court held that
"while exercising inherent jurisdiction
under Section 482 of the Cr.P.C. or revisional jurisdiction under Section 397 of
the Cr.P.C. where a complaint is sought to be quashed, it is not proper for the
High Court to consider the defence of the accused or embark upon an enquiry in
respect of merits of the accusations.  
However, in an appropriate case, if on
the face of the documents - which are beyond suspicion or doubt - placed by the
accused, the accusations against him cannot stand, it would be travesty of
justice if the accused is relegated to trial and is asked to prove his defence
before the trial Court. 
In such a matter, for promotion of justice or to prevent
injustice or abuse of process, the High Court may look into the materials which
has a significant bearing on the matter at a prima facie stage"
It was also a
case where the resignation of the appellant, as a director of the company, was
accepted and was duly reflected in the Resolution.  
Thereafter, the Company
informed the same to the Registrar of Companies in prescribed form (Form 32).
The Apex Court relied upon Form 32 and quashed the proceedings. 
As stated above  
the situation in the present case is some what identical to the Judgment of the
Apex Court referred to above.  
The contents of the acknowledgment of
registration of firms were not disputed by the counsel for the respondent except
stating that the said document can be used as a defence by the accused.  Though
a counter was filed by the respondent, the genuinity and authenticity of the
said document is not disputed.  
In view of the above findings, it would be
travesty of justice if the petitioner is subjected to the rigmorale of the
trial. Ergo, the proceedings  against the petitioner need to be terminated.

HONOURABLE SRI JUSTICE C.PRAVEEN KUMAR          

CRIMINAL PETITION No.9065 OF 2012    

10-10-2013

Smt. Bommidipati Madhavi....Petitioner/accused

The State of Andhra Pradesh rep.by Public Prosecutor, High Court of A.P.,
Hyderabad and another....Respondents

Counsel for Petitioner/accused:Sri E.Venkata Reddy

Counsel for Respondent No.1   :  Public Prosecutor
Counsel for Respondent No.2    :  Sri G.Ram Gopal

<GIST:

>HEAD NOTE:  

?Cases referred:

1) (2002) 5 SCC 661
2) 1992 Supp (1) SCC 335
3) 1997(2) SCC 699
4) (2011) 5 SCC 708; (2011) 2 SCC (Crl) 764
5) (2008) 17 SCC 147
6) (1984) 4 SCC 352
7) (2000) 1 SCC 1
8) 2011(3) SCC 351

HONOURABLE SRI JUSTICE C. PRAVEEN KUMAR          

CRIMINAL PETITION No.9065 OF  2012    

ORDER:

        This Criminal Petition, under Section 482 of Criminal Procedure Code, 1973
(for short 'the Cr.P.C.'), is filed by the petitioner - accused who is
proprietress of M/s. Sai Santhosh Constructions ( for short 'the firm'), seeking
to quash the proceedings in C.C.No.170 of 2012 on the file of the Metropolitan
Magistrate, Bheemunipatnam, Visakhapatnam district, initiated by the 2nd
respondent - complainant who is proprietor of Vasundara Enterprises against  the
petitioner for an offence punishable under Section 138 of Negotiable Instruments
Act, 1881 (for short 'the Act').

2. The allegations in the private complaint filed by the 2nd respondent are as
under:-

The petitioner approached the 2nd respondent, who is a wholesale dealer, for
supply of steel and cement etc., on credit basis.  The request of the petitioner
was accepted and steel and cement worth of Rs.5,19,600/- was supplied to the
petitioner from 11.09.2009 to 01.03.2010. It is alleged that the petitioner paid
Rs.1,53,565/-(Rupees one lakh fifty three thousand five hundred and sixty three
only) and the balance amount of Rs.3,66,035/-(Rupees three lakhs sixty six
thousand and thirty five only) was still due. On repeated demands, the
petitioner is alleged to have issued a cheque bearing No.000174, dated
10.11.2011 in favour of the 2nd respondent drawn on Union Bank of India,
Chandram Palem, Madhurawada, Visakhapatnam in discharge of the said debt. The  
said cheque when presented was returned with an endorsement "insufficient
funds". After complying with the statutory requirements, the present complaint
came to be filed before the Court of Chief Metropolitan Magistrate, at
Bheemunipatnam, Visakhapatnam district and the same was taken on file as
C.C.No.170 of 2012.

3. Heard the learned counsel for the petitioner, the learned counsel for the 2nd
respondent, learned Public Prosecutor for the 1st  respondent  and perused the
material on record.

4. The only ground raised by the learned counsel for the petitioner is that the
goods were supplied to a partnership firm  and initiation of proceedings without
making the firm as an accused is bad in law.  In support of his contention, he
placed reliance on the judgment of the Apex Court in Aneeta Hada v. Godfather
Travels & Tours Private Limited1

5. On the other hand, the learned counsel for the
2nd respondent would submit that since the complainant is a proprietary concern,
making the proprietary concern as an accused would not arise.  His main argument
appears to be that in the absence of any reply to a notice, issued by him,
wherein the petitioner was portrayed as a sole proprietress of Sai Santosh
Constructions, it cannot, now, be contended that it is a partnership firm. Since
the issues involved herein are  disputed questions of fact, he submits that the
same have to be established during the course of trial.

6. Before examining the rival contentions, it is necessary to refer to the scope
of interference by this Court under Section 482 of Cr.P.C. The law laid down by
the apex Court in State of Haryana v. Bhajanlal2 which has been followed in
several other judgments of Supreme Court is that interference is permissible :-
(a) where the allegations made in the First Information Report or the complaint,
even if they are taken at their face value and accepted in their entirety do not
prima facie constitute any offence or make out a case against the accused;
(b) where the allegations in the First Information Report and other materials,
if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying
an investigation by police officers under Section 156(1) of the Code except
under an order of a Magistrate within the purview of Section 155(2) of the Code;
(c) where the uncontroverted allegations made in the FIR or 'complaint and the
evidence collected in support of the same do not disclose the commission of any
offence and make out a case against the accused;
(d) where the allegations in the FIR do not constitute a cognizable offence but
constitute only a non-cognizable offence, no investigation is permitted by a
police officer without an order of a Magistrate as contemplated under Section
155(2) of the Code;
(e) where the allegations made in the FIR or complaint are so absurd and
inherently improbable on the basis of which no prudent person can ever reach a
just conclusion that there is sufficient ground for proceeding against the
accused;
(f) where there is an express legal bar engrafted in any of the provisions of
the Code or the concerned Act (under which a criminal proceeding is instituted)
to the institution and continuance of the proceedings and/or where there is a
specific provision in the Code or the concerned Act, providing efficacious
redress for the grievance of the aggrieved party;
(g) where a criminal proceeding is manifestly attended with mala fide and/or
where the proceeding is maliciously instituted with an ulterior motive for
wreaking vengeance on the accused and with a view to spite him due to private
and personal grudge.
In State of Karnataka v. L.Muniswamy3, the Apex Court held as under;-
Considerations, justifying the exercise of inherent powers for securing the ends
of justice vary from case to case and the  a jurisdiction as a wholesome as  the
one conferred by Section 482 of Cr.P.C. ought not to be encased within the
strait-jacket of a rigid formula.

7. In Sushil Suri v. Central Buearo of Investigation4, the Apex Court considered
the scope and ambit of inherent jurisdiction of the High Court and made the
following observations in para 16 of the report which is as under:-
"16. Section 482 Cr.P.C. itself envisages three circumstances under which the
inherent jurisdiction may be exercised by the High Court, namely i) to give
effect to an order under Cr.P.C.; (ii) to prevent an abuse of the process of
Court; and (iii) to otherwise secure the ends of justice. It is trite that
although the power possessed by the High Court under the said provision is very
wide but it is not unbridled. It has to be exercised sparingly, carefully and
cautiously, ex debito justitiae to do real and substantial justice for which
alone the court exists. Nevertheless, it is neither feasible nor desirable to
lay down any inflexible rule which would govern the exercise of inherent
jurisdiction of the Court. Yet, in numerous cases, this Court has laid down
certain broad principles which may be borne in mind while exercising
jurisdiction under Section 482 Cr.P.C. Though it is emphasized that exercise of
inherent powers would depend on the facts and circumstances of each case, but
the common thread which runs through all the decisions on the subject is that
the Court would be justified in invoking its inherent jurisdiction where the
allegations made in the complaint or charge-sheet, as the case may be, taken at
their face value and accepted in their entirety, do not constitute the offence
alleged."


8. Keeping in view the principles of law laid down by the Apex Court with regard
to the scope and power of High Court under Section 482 of Cr.P.C., I proceed to
deal with the matter.

9. Now the question that arise for determination  is  whether the petitioner is
a proprietress of a firm or a managing partner of a partnership firm?
10. Before proceeding further, it would be relevant to extract Section 138(c) of
the Act which reads as under:-
Provided that nothing contained in this Section shall apply unless:-
(c) the drawer of such cheque fails to make the payment of the said amount of
money to the payee or, as the case may be, to the holder in due course of the
cheque within fifteen days of the receipt of the said notice.

A reading of the said provision would disclose that nothing in the Section shall
apply unless the drawer of the cheque fails to make the payment of the said
amount of money to the payee or, as the case may be,  to the holder in due
course of the cheque within 15 days of the receipt of the said notice.
11. The material, which is filed  along with the complaint, i.e. the cheque
bearing No.000174, dated 10.11.2011 and the 69 bills  would show that the cheque
was issued by the petitioner in favour of the 2nd respondent drawn on Union Bank
of India, Chandram Palem, Madhurawada, Visakhapatnam as an authorized signatory  
of Sai Santhosh Constructions and  the 9 bills show purchase of the material by
Sai Santhosh Constructions.

        12.  Therefore, the cheque in dispute, was issued by the petitioner as an
authorized signatory of Sri Sai Santhosh Constructions.  In order to
substantiate the said plea namely, that the cheque was issued by the petitioner
as a partner of the firm, the learned counsel for the petitioner mainly relied
upon the original of acknowledgment of Registration of firm, wherein it is
mentioned that the petitioner was running the business in the name of Sai
Santhosh Constructions, Ratna Residency, P.M. Palem, Visakhapatnam and the same    
was entered in the Registrar of Firms as S.No.730/2007 at Visakhapatnam.  Along
with the acknowledgment of registration of firms, the petitioner also placed on
record the original partnership deed entered into between the petitioner and her
husband.  The certificate of registration of firm would also discloses that the
Registrar of firms, Andhra Pradesh, acknowledges the receipt of the statement
prescribed under Section 58(1)  of Indian Partnership Act.
        13.  At this stage, the learned counsel for the respondent objected for
looking into the said document by contending that the plea taken by the
petitioner would be her defence which the petitioner can avail of during the
course of trial and the same cannot be accepted at this stage.  In support of
his contention, he relied upon a Judgment of the Apex Court in Malwa Cotton and
Spinning Mills Limited vs. Visa Singh Sidhu and others5.  It was a case where
Form 32 which has been filed to show that the accused therein resigned from the
Directorship of the company prior to the issuance of the cheque, was not taken
into consideration by the Apex Court, though the said document was issued by the
Registrar of Companies.   But a perusal of the said Judgment would disclose that
Form 32 was not looked into because of some factual disputes i.e., 1) the effect
of delayed presentation before the Registrar of Companies, 2) Whether the
respondent No.1 had intimated to the respondent company, 3) Whether there was
any resolution accepting the resignation.  Since the issues involved in the said
case were disputed questions of fact, the Apex Court refused to consider Form 32
though the contents of which are not in dispute.

        14.  The situation on hand is totally different.  Though the counsel for
the respondent filed a counter, he did not dispute the authenticity and
genuinity of the acknowledgment of registration of firms which is placed on
record by the counsel for the petitioner.  The contents of the acknowledgment of
registration of firms gets corroboration from the documents filed        by the 2nd
respondent along with the complaint.

15.  As stated earlier, the complaint under Section 138 of the Act, can be
initiated only when the drawer of such cheque fails to make the payment of the
said amount to the payee or, as the case may be, to the holder in due course of
the cheque, within fifteen days of the receipt of the said notice. The cheque
which is filed along with the complaint would show that the petitioner was an
authorized signatory of a partnership firm.


      16. A further objection was raised by the learned counsel for the 2nd
respondent that in the absence of a reply to the statutory notice issued under
the Act, a presumption has to be drawn that the said cheque was issued on behalf
of proprietary concern. It is true that the 2nd respondent issued notice to the
petitioner by describing the petitioner as a sole proprietress of Sai Santosh
Constructions. Though the notice was served on the petitioner, no reply was sent
to the said notice. Merely because the petitioner was shown as a proprietress
and that no reply was given by the petitioner, an adverse inference cannot be
drawn against the petitioner when the documents filed along with the complaint
and the Acknowledgment of Registration of Firms  issued by the Registrar of
firms, dated 19.11.2007 establish that Sri Sai Santhosh Constructions was
represented as a partnership firm in the year 2007 itself. Therefore, there is
no irregularity or illegality in petitioner issuing the cheque as an authorized
signatory of the firm.  When once it is established,  that it is a partnership
firm and the cheque was issued by the managing partner of a firm, arraying the
firm as an accused is necessary. In view of the judgment of the Apex Court in
Aneeta Hada's case, wherein a three judge Bench of the Apex Court, while
overruling the view taken in Sheoratan Agarwal v. State of M.P.6, and clarifying
judgment in Anil Hada v. Indian Acylic Ltd7, held that for maintaining a
prosecution under Section 141 of the Act, arraying of a company as an accused is
imperative and other categories of offenders can only be brought in the drag-net
on the touchstone of vicarious liability as stipulated in the provisions.


        17. The issue as to whether the documents filed by the accused can be
looked into has come up for consideration in Harshendra Kumar D. v. Rebatilata
Koley8 wherein the Apex Court held that "while exercising inherent jurisdiction
under Section 482 of the Cr.P.C. or revisional jurisdiction under Section 397 of
the Cr.P.C. where a complaint is sought to be quashed, it is not proper for the
High Court to consider the defence of the accused or embark upon an enquiry in
respect of merits of the accusations.  However, in an appropriate case, if on
the face of the documents - which are beyond suspicion or doubt - placed by the
accused, the accusations against him cannot stand, it would be travesty of
justice if the accused is relegated to trial and is asked to prove his defence
before the trial Court. In such a matter, for promotion of justice or to prevent
injustice or abuse of process, the High Court may look into the materials which
has a significant bearing on the matter at a prima facie stage". It was also a
case where the resignation of the appellant, as a director of the company, was
accepted and was duly reflected in the Resolution.  Thereafter, the Company
informed the same to the Registrar of Companies in prescribed form (Form 32).
The Apex Court relied upon Form 32 and quashed the proceedings. As stated above
the situation in the present case is some what identical to the Judgment of the
Apex Court referred to above.  The contents of the acknowledgment of
registration of firms were not disputed by the counsel for the respondent except
stating that the said document can be used as a defence by the accused.  Though
a counter was filed by the respondent, the genuinity and authenticity of the
said document is not disputed.  In view of the above findings, it would be
travesty of justice if the petitioner is subjected to the rigmorale of the
trial. Ergo, the proceedings  against the petitioner need to be terminated.


        18. Accordingly, the Criminal Petition is allowed by quashing the
proceedings against the petitioner/accused in C.C.No.170 of 2012 on the file of
the Metropolitan Magistrate, Bheemunipatnam, Visakhapatnam district.


 19. Miscellaneous petitions, if any, pending in this Criminal Petition shall
stand closed.

____________________  
C.PRAVEEN KUMAR, J    
Date:10-10-2013

Selling of flats - No privity of contract - no deficiency of service- contract between Res. No. 2 and Complainant - Complainant paid amount to Res. 2 - there is no direct contract between Res.1 and complainant - in absence of privity of contract - in the absence of consideration - Res.1 is not liable to refund the amount as the memorandum of agreement was terminated between Res. 2 and Res.1 and as per the termination , the Res.2 has to refund the amount taken from complainants - Res. No.2 not filed any appeal , Res. 1 directed to recover the same from Res. 2 - all revisions are allowed = M/s. Shree Construction Versus 1. Mr. Suryakanth Parshuram Sawant 2. M/s. Vastu Promoters & Consultants … Respondents/Complainants= published in ncdrcrep/judgement/00131202135111612RP2259-258408.htm

Selling of flats - No privity of contract - no deficiency of service- contract between Res. No. 2 and Complainant - Complainant paid amount to Res. 2 - there is no direct contract between Res.1 and complainant - in absence of privity of contract - in the absence of consideration - Res.1 is not liable to refund the amount as the memorandum of agreement was terminated between Res. 2 and Res.1 and as per the termination , the Res.2 has to refund the amount taken from complainants - Res. No.2 not filed any appeal , Res. 1 directed to recover the same from Res. 2 - all revisions are allowed =
Memorandum of Understanding was executed between petitioner and Respondent No. 2 and petitioner appointed Respondent No. 2 as promoter/consultant/sole selling agent for selling the flats, etc.  
In paragraph 12 of the MOU, petitioner agreed and assured not to increase the rate of Rs.565/- per sq. ft. built up area.

8.        Paragraph 14 of the MOU runs as under:
“14.   It is agreed between the parties that the Promoters/Agents are entitled and free to book the said flats as per their sweet will and wish, and at the rate which they may deem fit/desire and in such cases, the Developers are not entitled for any increase etc. on such flats booked by the Promoters/Agents either directly and/or through any other agents. It is further agreed between the parties that the Developers are not entitled to sell/resale the said flats to any other Promoters/Agents/Company/Persons.”


9.      Paragraph 14 thus makes it clear that all built up area was to be sold by Respondent No. 2 at any rate which they deem fit and petitioner had no right to sell/resale constructed flats to any other party, meaning thereby, petitioner sold built up area to Respondent No. 2 and in pursuance of this MOU, Respondent No. 2 entered into MOU with Respondent No. 1 for sale of the flat. 
 Proviso at page 5 of the MOU entered between Respondent No. 1 & Respondent No. 2 runs as under:
“Provided further that upon termination of this Agreement as aforesaid the promoter shall refund to the flat purchaser the inslalments of sale price of the said flat which may till then have been paid by the Flat Purchaser to the Promoter.  The promoter shall not be liable to pay to the flat purchaser any interest on the amount so refunded and upon termination of this Agreement and refund of such amount by the promoter, the promoter shall be at liberty to dispose and at such price and on such conditions as the promoter may in their absolute discretion think fit”.


10.    Thus, proviso makes it crystal clear that on the termination of the agreement, Respondent No. 2 was liable to refund the amount received from Respondent No. 1 without interest and nowhere liability has been fastened on the petitioner to refund the amount received by Respondent No. 2 from Respondent No. 1. 
In such circumstances, it cannot be presumed that Respondent No. 2 sold the flats to Respondent no. 1 as agent of petitioner, but it appears that petitioner sold the constructed built up area to Respondent No. 2 who in turn entered into MOU with Respondent No. 1 for sale of flats and in pursuance to that MOU, Respondent No. 2 received money.  
Liability to refund the money on termination of the MOU was only of Respondent No. 2 and petitioner was not liable to refund the amount firstly, there was no privity of contract between the petitioner and Respondent No. 1 and secondly, petitioner has not received any amount from the Respondent No. 2, which was collected by him from Respondent No.1.

11.    Thus, it becomes clear that Respondent No. 2 has not received money from Respondent no. 1 as agent of petitioner and learned District Forum has committed error in holding petitioner also liable for refund of money and learned State Commission has committed error in dismissing appeal of the petitioner.

12.    Respondent No. 2 has not filed any appeal against the order of District Forum and Respondent No. 1 is free to recover the whole amount from Respondent No. 2.



NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI





REVISION PETITION NO. 2259 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 268 of 2007 @ Misc. Appl. No. 371/2007 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)
                                          
M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai – 400 078                                     …  Petitioner/Opp.Party (OP)
Versus
1. Mr. Suryakanth Parshuram Sawant
    D-233, Surya Darshan,
    G.D. Ambedkar Marg
    Parle, Mumbai – 400 012

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants

REVISION PETITION NO. 2447 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 274 of 2007 @ Misc. Appl. No. 377/2007 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)

M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai – 400 012                                       …  Petitioner/Opp.Party (OP)
Versus
1. Smt. Yogeeta Yashpal Vijan
    Building No. 20, Flat No. 318,
    M.H. Road, Sardar Nagar – 4,
    Antup Hill,
    Mumbai – 400 012

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants


REVISION PETITION NO. 2448 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 273 of 2007 @ Misc. Appl. No. 376/2007 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)

M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai– 400 012                                        …  Petitioner/Opp.Party (OP)
Versus
1. Mr. Kantilal Ambalal Thakr
    24/402, Telang Road
    Agarwal Niwas, 2nd Floor,
    Matunga,  Mumbai – 400 019

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants

REVISION PETITION NO. 2449 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 272 of 2007 @ Misc. Appl. No. 375/2007 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)

M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai– 400 012                                    …  Petitioner/Opp.Party (OP)
Versus
1. Smt. Rekha Ramesh Gawad
    B-305, Sudha Palace,
    Near Chate Classes,
    ViratnagarVirar,
    Mumbai – 401 303

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants

REVISION PETITION NO. 2581 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 267 of 2007 @ Misc. Appl. No. 370/2007of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)

M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai – 400 012                                       …  Petitioner/Opp.Party (OP)
Versus
1. Mr. Milind N. Deshmukh
    Shivkrupa
    C/o Deshmukh Oil Mills,
    Ketan Nagar, Margarule Road
    Mumbai – 400 012

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants

 

REVISION PETITION NO. 2582 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 269 of 2007 @ Misc. Appl. No. 372/2007 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)

M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai– 400 012                                        …  Petitioner/Opp.Party (OP)
Versus
1. Mr. Arun Balkrishna Narvankar
    9A, Narmada Niwas, First Floor,
    J.K. Sawant Road, Dadar (W),
    Mumbai – 400 028

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants

 

REVISION PETITION NO. 2583 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 270 of 2007 @ Misc. Appl. No. 373/2007 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)

M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai– 400 012                                    …  Petitioner/Opp.Party (OP)
Versus
1. Mr. Arun Sitaram Kushe
    111, 2/5, MESB Quarters (Staff)
    Inside  National Park, Borivali (E)
    Mumbai – 400 066

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants

REVISION PETITION NO. 2584 OF 2008

 (From the order dated 09.01.2008 in First Appeal No. 271 of 2007 @ Misc. Appl. No. 374/2007 of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai)

M/s. Shree Construction
C/o Bharati Industries
Sonapur, LBS Marg,
Mumbai– 400 012                                        …  Petitioner/Opp.Party (OP)
Versus
1. Mr. Rajen Chandulal Shah
     217/A, I – Karol , 27th Road
    TPS (E), Bandra (E)
    Mumbai – 400 050

2. M/s. Vastu Promoters & Consultants
    8/17, Sahyadri Nagar, Charkop
    Kandivali (W),
    Mumbai – 400 067                               …  Respondents/Complainants

BEFORE: 
HON'BLE MR. JUSTICE K. S. CHAUDHARI, PRESIDING MEMBER

HON’BLE DR. B C. GUPTA, MEMBER

       
For the Petitioner                     : MR. Anand Padmanabhan &
    Mr. MohdWasay Khan, Advocates
For the Respondents No. 1     : Mr. Arun S. Kushe, in person in RP
    No. 2583/2008 and AR of other
    Respondents No. 1

For the Respondents No. 2     : Ex parte

PRONOUNCED ON  2nd  December,  2013

 

 

O R D E R



 PER JUSTICE K.S. CHAUDHARI, PRESIDING MEMBER

All these revisions arise out of separate judgments dated 9.1.2008 in appeals filed against judgments of the District Forum.  Accordingly, the revisions were heard together and are being disposed of by common order.
          These revision petitions have been filed by the petitioner against the orders dated 9.1.2008 passed by Maharashtra State Consumer Disputes RedressalCommission, Circuit Bench at Aurangabad (in short, ‘the State Commission’) in Appeal Nos. 2259/08, 2447-2449/08 & 2581/08 to 2584/08 – M/s. Shree Construction Vs. Suryakant Parshuruam Sawant & Anr., M/s. Shree Construction Vs. Smt. Yogeeta Yashpal Vijan & Anr., M/s. Shree Construction Vs. KantilalAmbalal Thakur & Anr., M/s. Shree Construction Vs. Smt. Rekha Ramesh Gawad & Anr., M/s. Shree Construction Vs. Milind N. Deshmukh & Anr., M/s. Shree Construction Vs. Arun Balkrishna Narvankar & Anr., M/s. Shree Construction Vs. Arun Sitaram Kushe & Anr. & M/s. Shree Construction VsRajen ChandulalShah & Anrby which, while dismissing appeals, order of District Forum allowing complaints were upheld.

2.      Brief facts of the case are that complainant/Respondent entered into an agreement with OP No. 1/Respondent No. 2 for purchase of residential accommodation in proposed Grahashanti Apartment” for which, OP No. 1 had paid Rs.6,64,600/- to OP No. 2.  Complainant was informed that construction will start on 10.6.1992 and will be ready for possession before 31.12.1993.  It was further alleged that OP Nos. 1 & 2 entered into Memorandum of Understanding (MOU) in June, 1992 and OP No. 1 was referred as sole selling agent for selling flats, shops, etc. to be constructed on the property.  It was further alleged that till today, no construction has been made.  Alleging deficiency on the part of OP, complainants filed separate complaints before District Forum.  OP No. 1 resisted complaint and submitted that Mr. Balu Sadashiv Narkhede was one of the partners of OP No. 1, who illegally entered into transaction which is not binding on OP No. 1.  It was further submitted that OP No. 1 paid Rs.6,64,600/- to OP No. 2 and in such circumstances, onus was entirely on the OP No. 2 to carry out construction or to give compensation to the purchasers and prayed for dismissal of complaints.  OP No. 2 also filed written statement, denied receipt of Rs.6,64,600/- from OP No. 1 and denied other allegations and further submitted that complaint was barred by limitation and prayed for dismissal of complaint.  Learned District Forum after hearing both the parties allowed complaint and directed OPs to refund the amount jointly and severally with interest @ 12% p.a. and further imposed cost and compensation.  Appeals filed by the appellant were dismissed by learned State Commission vide impugned orders against which, these revision petitions have been filed.    

3.      None appeared for the Respondent No. 2 even after service.

4.      Heard learned Counsel for the petitioner and respondent No. 1 and his representative and perused record.

5.      Learned Counsel for the petitioner submitted that there was no privity of contract between the petitioner and Respondent No. 1 and petitioner has not received any amount from respondent even then learned District Forum has committed error in allowing refund of the amount and learned State Commission further committed error in dismissing appeals; hence, revision petitions be allowed.  On the other hand, authorized representative of the respondents submitted that order passed by the State Commission is in accordance with law; hence, revision petition be dismissed.

6.      Perusal of impugned order reveals that order of District Forum was upheld as Respondent No. 2 was sole selling agent of the petitioner and respondent No. 2 received payment from Respondent No. 1; so, petitioner was bound to refund the money. It was further observed that ‘The Site Worship Ceremony’ invitation was extended jointly by petitioner and Respondent No. 2; so, both are liable to refund the amount.

7.      Perusal of record reveals that Memorandum of Understanding was executed between petitioner and Respondent No. 2 and petitioner appointed Respondent No. 2 as promoter/consultant/sole selling agent for selling the flats, etc.  
In paragraph 12 of the MOU, petitioner agreed and assured not to increase the rate of Rs.565/- per sq. ft. built up area.

8.        Paragraph 14 of the MOU runs as under:
“14.   It is agreed between the parties that the Promoters/Agents are entitled and free to book the said flats as per their sweet will and wish, and at the rate which they may deem fit/desire and in such cases, the Developers are not entitled for any increase etc. on such flats booked by the Promoters/Agents either directly and/or through any other agents. It is further agreed between the parties that the Developers are not entitled to sell/resale the said flats to any other Promoters/Agents/Company/Persons.”


9.      Paragraph 14 thus makes it clear that all built up area was to be sold by Respondent No. 2 at any rate which they deem fit and petitioner had no right to sell/resale constructed flats to any other party, meaning thereby, petitioner sold built up area to Respondent No. 2 and in pursuance of this MOU, Respondent No. 2 entered into MOU with Respondent No. 1 for sale of the flat. 
 Proviso at page 5 of the MOU entered between Respondent No. 1 & Respondent No. 2 runs as under:
“Provided further that upon termination of this Agreement as aforesaid the promoter shall refund to the flat purchaser the inslalments of sale price of the said flat which may till then have been paid by the Flat Purchaser to the Promoter.  The promoter shall not be liable to pay to the flat purchaser any interest on the amount so refunded and upon termination of this Agreement and refund of such amount by the promoter, the promoter shall be at liberty to dispose and at such price and on such conditions as the promoter may in their absolute discretion think fit”.


10.    Thus, proviso makes it crystal clear that on the termination of the agreement, Respondent No. 2 was liable to refund the amount received from Respondent No. 1 without interest and nowhere liability has been fastened on the petitioner to refund the amount received by Respondent No. 2 from Respondent No. 1. 
In such circumstances, it cannot be presumed that Respondent No. 2 sold the flats to Respondent no. 1 as agent of petitioner, but it appears that petitioner sold the constructed built up area to Respondent No. 2 who in turn entered into MOU with Respondent No. 1 for sale of flats and in pursuance to that MOU, Respondent No. 2 received money.  
Liability to refund the money on termination of the MOU was only of Respondent No. 2 and petitioner was not liable to refund the amount firstly, there was no privity of contract between the petitioner and Respondent No. 1 and secondly, petitioner has not received any amount from the Respondent No. 2, which was collected by him from Respondent No.1.

11.    Thus, it becomes clear that Respondent No. 2 has not received money from Respondent no. 1 as agent of petitioner and learned District Forum has committed error in holding petitioner also liable for refund of money and learned State Commission has committed error in dismissing appeal of the petitioner.

12.    Respondent No. 2 has not filed any appeal against the order of District Forum and Respondent No. 1 is free to recover the whole amount from Respondent No. 2.

13.    Consequently, revision petitions filed by         the petitioner are allowed and impugned orders dated 9.1.2008 passed by learned State Commission in Appeal Nos. 2259/08, 2447-2449/08 & 2581/08 to 2584/08 – M/s. Shree Construction Vs. Suryakant Parshuruam Sawant & Anr., M/s. Shree Construction Vs. Smt. Yogeeta Yashpal Vijan & Anr., M/s. Shree Construction Vs. Kantilal Ambalal Thakur & Anr., M/s. Shree Construction Vs. Smt. Rekha Ramesh Gawad &Anr., M/s. Shree Construction Vs. Milind N. Deshmukh & Anr., M/s. Shree Construction Vs. Arun Balkrishna Narvankar & Anr., M/s. Shree Construction Vs. ArunSitaram Kushe & Anr. & M/s. Shree Construction VsRajen Chandulal Shah & Anrand order of District Forum to the extent allowing complaints against petitioner are set aside.  There shall be no order as to costs.
         
..……………Sd/-……..………
     (K. S. CHAUDHARI, J)
      PRESIDING MEMBER

                                                               
  ……………Sd/-….……………
                                                        (DR. B. C. GUPTA)
                                                                            MEMBER
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