ANITA RANI versus ASHOK KUMAR & ORS on 16 December 2021

964

SUPREME COURT REPORTS

[2021] 13 S.C.R.

ANITA RANI

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v.

ASHOK KUMAR & ORS

(Civil Appeal Nos. 7750-7751 of 2021)

BDECEMBER 16, 2021

[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]

Civil Suit: Suit for Recovery of Money – In the instant case,appellant filed two suits against respondents for recovery of money– Appellant and respondents are relatives – In the first suit,Crespondents borrowed a sum of Rs.10,50,000/- from the appellantby way of a cheque, out of which Rs.5,00,000/- was refunded byrespondents and promised to repay the balance within six monthsbut failed to refund – In the second suit, appellant and her husbandjoined respondent in his real estate business in which variousDamounts were either withdrawn from or transferred out of appellant’saccounts by the respondent unauthorisedly amounting toRs.54,50,000/- – Trial Court dismissed both the suits – First appellatecourt allowed the appeals – Respondents filed appeals before HighCourt which were allowed resulting in dismissal of the two moneysuits – On appeal, held: In the first suit, the defence set up by theErespondents was that the payment of Rs.5,00,000/- made by themwas by way of full and final settlement – However, no receipt andwritten memorandum of compromise/settlement were taken byrespondents from the appellant – When a party pleads partrepayment in full and final settlement of certain some of money, theFonus is upon him to show that there was a settlement – This onuswas not discharged by the respondent – Hence, the appellant entitledto succeed in the first suit – In the second suit, defence of therespondents was that the amounts represented authorized paymentsfor the purchase and sale of properties in a real estate businessand that out of those amounts, a sum of Rs.30,00,000/ was treatedGas a payment made out of love and affection – The onus was ondefence to show that there were business dealings, however, nobooks of accounts were produced by the defence to show that theamounts flowed out for business dealings – If the appellants hadtreated Rs. 30,00,000/ as one made out of love and affection, thereH

could have been no occasion for dispute requiring mediation,resulting in the payment of Rs.5,00,000/- by respondents to appellantin full and final settlement in an interval of five months – The onlypiece of evidence on the basis of which the gratuitous nature ofpayment is sought to be proved is an affidavit sworn by appellant,but it did not contain the signature of the appellant – Hence, pleaof gratuitous payment was not established by the respondents –Suit decree.

Allowing the appeals, the Court

Conclusion

Allowing the appeals, the Court

HELD: 1. The first suit was for recovery of a sum ofRs.5,50,000/-, which remained unrefunded, out of the amount ofRs.10,50,000/- allegedly paid by way of loan. The receipt ofRs.10,50,000/ by way of cheque dated 18.11.2003 was admittedby the respondents. Similarly the repayment of Rs.5,00,000/ bythe respondents to the plaintiff appellant on 7.08.2006 is admittedby the appellant. The only defence set up by the respondentswas that the payment of Rs.5,00,000/made by them on 7.08.2006was by way of full and final settlement. To show that there was afull and final settlement, the respondents examined two third partymediators. But no receipt was taken by the respondents fromthe appellant that the payment of Rs.5,00,000/on 7.08.2006 wasin full and final settlement. There was also no writtenmemorandum of compromise/settlement. When payment of acertain amount of money and the repayment of only a portion ofthe same are admitted, the party pleading that such a partrepayment was in full and final settlement, has a huge burdencast upon him to show that there was a settlement. Oral evidenceof the so called third party mediators, is not sufficient to establishfull and final settlement, in cases of this nature, where alltransactions have happened only through banking channels andthe defendants claimed that there were business transactions. Itis unbelievable that the respondents, who reached such asettlement, failed to have the same recorded in black and white,either in the form of a memo or in the form of a receipt. This onuswas not discharged by the respondents in the first suit and, hence,the plaintiff was entitled to succeed in the first suit. The HighCourt completely overlooked this aspect. [Paras 16,18][971-C-G; 972-D]

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A2. Coming to the second suit, the case of the appellant wasthat various amounts of money were either withdrawn from ortransferred out of their accounts, by the defendantsunauthorisedly and that the amounts so taken away totaled toRs.54,50,000/. The defence of the respondents was that theamounts represented authorized payments for the purchase andBsale of properties in a real estate business and that out of thoseamounts, a sum of Rs.30,00,000/ was treated as a payment madeout of love and affection. In such a case, the respondents areobliged to produce the accounts of the real estate business andshow how those amounts were accounted for. The respondentsCcould not produce any books of account. Therefore, therespondents thought it convenient to claim that all those amountswere investments in a real estate business and that a portion of itwas agreed to be treated as a gratuitous payment. Investmentsin business dealings and gratuitous payments do not normally gotogether. As in the first case, the flow of money from the accountDof the appellant into the respondents’ account is admitted. Whilethe appellant termed such a flow of money as unauthorizedwithdrawal /transfer, the respondents claimed the same to be partof investment in real estate business. In the light of such a defence,the onus, even in the second suit, was on the defence to showEthat there were business dealings and that the amount stoodcompletely accounted for. No books of accounts were producedby the defence to show that the amounts that flowed out of theplaintiff’s bank account were absorbed and accounted for withinbusiness. [Paras 19, 20][972-D-H; 973-A-B]

F3. In regard to the defence of gratuitous nature of payment,the only piece of evidence on the basis of which the gratuitousnature of payment is sought to be proved is Exhibit D3, but itdoes not contain the signature of the appellant. Therefore, theplea of gratuitous payment is unbelievable and was not establishedby the respondents. Hence, the Judgment and decrees of theGHigh Court are set aside and the Judgment and decrees of theFirst Appellate Court are restored. [Paras 24, 28][974-E; 975-D]

State of West Bengal v. B.K. Mondal & Sons AIR 1962SC 779 : [1962] 1 Suppl. SCR 876 – referred to.

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Case Law Reference

[1962] 1 Suppl. SCR 876referred toPara 26

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 7750-7751 of 2021.

From the Judgment and Order dated 20.03.2018 of the High Courtof Punjab and Haryana at Chandigarh in RSA No.6134 of 2015 (O&M)and RSA No.130 of 2016 (O&M).

Rajiv Bhalla, Ms. Jyoti Mendiratta, Advs. for the Appellant.

Nidhesh Gupta, Sr. Adv., G. Balaji, Advs. for the Respondents.

The Judgment of the Court was delivered by

V. RAMASUBRAMANIAN, J.

1. Leave granted.

2. The two money suits filed by her having been dismissed by thetrial Court, but decreed by the First Appellate Court and the decrees sopassed by the First Appellate Court having been reversed by the HighCourt in two second appeals, the plaintiff-appellant is back to squareone and is before us in the above appeals.

3. We have heard Shri Rajiv Bhalla, learned counsel for theappellant and Shri Nidhesh Gupta, learned senior counsel for therespondents.

4. The appellant herein filed two suits in Civil Suits No.15643 and15592 of 2007 against the respondents herein, on the file of the Court ofthe Civil Judge (Junior Division), Chandigarh, for recovery of (i) a sumof Rs.10,48,000/- in the first suit; and (ii) a sum of Rs.67,31,000/- in thesecond suit. The averments in the first suit were as follows: (i) that thesecond respondent herein is the sister of the appellant’s husband; (ii)that the first respondent is the husband and the third respondent herein isthe son of respondent No.2; (iii) that the respondents herein (defendantsin the suit) were carrying on the business of dealing in building materialsunder the name and style of Prem Chand Amar Chand; (iv) that theappellant and her son are having a joint account in ICICI Bank, Sector-9, Chandigarh, where the respondents also maintain an account; (v) thatthe respondents borrowed a sum of Rs.10,50,000/-from the appellant on18.11.2003, by way of a cheque; (vi) that though the respondents refunded A

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Aa sum of Rs.5,00,000/- on 7.08.2006, promising to repay the balancewithin six months, they failed to honour the commitment; (vii) that,therefore, the respondents were liable to pay a sum of Rs.5,50,000/-towards principal and a sum of Rs.4,98,000/- towards interest, thus,totaling to Rs.10,48,000/-.B5. The averments in the second suit in brief were as follows: (i)that in the year 2001-2002, respondent No.1 lured the plaintiff and herhusband to join him in his real estate business: (ii) that since the appellantand her family were residing in Kurukshetra and the respondents wereliving in Chandigarh, the respondent No.1 got the signature of the appellantin some blank papers, on the ground that it was not possible to shuttleCevery time between these two places, whenever a transaction was to becompleted; (iii) that the appellant and her son were having account inthe same branch of the same bank in which respondent Nos.1 and 2were also having account; (iv) that with a view to make availablenecessary funds, for the use of respondent No.1 in real estate dealings,Dthe appellant and her son kept substantial amounts to their credit in theirbank account; (v) that in March, 2006 the appellant and her husbandwere shocked to find that substantial amounts totaling to Rs.54,50,000/-had been withdrawn from their account on different dates by therespondents; (vi) that on her request, the bank officers produced therecords, which disclosed that a cheque dated 30.12.2005 for a sum ofERs.25,00,000/-, signed by respondent No.3 by forging the signature ofthe plaintiff had been encashed, apart from the withdrawal of a sum ofRs.9,50,000/- on 9.05.2005 and the transfer of another sum ofRs.20,00,000/- purportedly on the written request of the appellant on27.8.2005; (vii) that the withdrawals/ transfer of these amounts wereFnot authorized by the appellant, but had been done by misusing thesignatures obtained from the appellant; (viii) that after finding out thesefacts, the appellant lodged a complaint in FIR No.195 on 14.12.2006against the respondents for the offences punishable under Sections 420,467, 468 and 471 read with Section 120-B of the Indian Penal Code; (ix)

that the respondents were granted anticipatory bail in the criminal case,Gupon their furnishing bank guarantee for a sum of Rs.50,00,000/- and(x) that the amounts withdrawn by/transferred to the account of thedefendants, together with interest @ 12% per annum worked out toRs.67,31,000/- and (xi) that therefore they were filing the suit for recoveryof the said amount.H

6. The case of the respondents in the first suit for recovery ofRs.10,48,000/- was: (i) that they never borrowed any money from theappellant; (ii) that the amount received by them under the cheque dated18.11.2003 was for the purpose of investment in a property, which waspart of the real estate business; (iii) that the payment of Rs.5,00,000/-made by them on 7.08.2006 was in full and final settlement of the claim,after a compromise was arrived at the intervention of three persons byname Satish Kumar, Prem Raj Aggarwal and O.P. Gupta; and (iv) thatsince there was no borrowing, the question of payment of interest doesnot arise and that the suit was liable to be dismissed.

7. In their written statement of the second suit, it was contendedby the respondents: (i) that the appellant and the respondents starteddoing real estate business jointly from the year 2001-2002; (ii) that theypurchased and sold many properties and shared the profits; (iii) that therespondents never got the signatures of the appellant in blank papers;(iv) that the amounts represented by the cheques dated 9.05.2005,27.08.2005 and 30.12.2005 were towards the investment made by theappellant and her son in the real estate business; (v) that the appellantissued confirmation letters to the bank, which showed that the paymentsunder those cheques were authorized payments; (vi) that the appellant’sson actually gave an affidavit both on his behalf and on behalf of theappellant; (vii) that in the said affidavit, it was admitted by the appellant’sson that out of the amounts paid under the three cheques, a sum ofRs.30,00,000/- was given, out of love and affection; (vii) that the appellantfiled a false complaint, as though the respondents cheated her andwithdrawn money by forging the signatures; (viii) that in view of theallegations against the bank, the appellant ought to have impleaded thebank as a party to the suit and (ix) that no money is due and payable bythe respondents to the appellant.

8. Before the trial Court, the appellant examined her husband asPW-1 and examined herself as PW-2. The first respondent examinedhimself as DW-1 and he examined as DWs 2 and 3, the third partymediators, in the presence of whom a settlement was purportedly arrivedat. The respondents marked a photocopy of the letter addressed to theManager of the bank bearing the signature of the appellant as ExhibitD-1. They also filed the confirmation letter dated 2.01.2006 as ExhibitD-2 and the affidavit purportedly signed by the appellant’s son both onhis behalf and on behalf of the appellant, as Exhibit D-3.

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A9. By a judgment and decree dated 23.01.2013, the trial Courtdismissed the first suit on the ground that the appellant-plaintiff failed toestablish the advancement of the loan and that her failure to examineher son, who was the joint account holder, as a witness in the suit, wasfatal. The trial Court also held the suit was not within the period oflimitation.B

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10. By a separate Judgment and decree dated 22.07.2013, thetrial Court dismissed the second suit on the ground that the parties werein real estate business and that the payment of Rs.5,00,000/- in full andfinal settlement on 7.08.2006, stood proved by the version of third partymediators examined as DW-2 and DW-3. The Court also held that theCappellant failed to establish fraud on the part of the respondents.

11. The district Judge, Chandigarh by two separate Judgmentsdated 18.03.2015, allowed the first appeals filed by the appellant in CivilAppeal Nos.903 and 1056 of 2013 and granted a decree in the first suitfor recovery of Rs.5,50,000/- together with interest @ 7.5% per annumDfrom the due date till the date of decree and interest @ 6% per annumfrom the date of the decree till realization. In the second suit, the trialcourt granted a decree for recovery of Rs.54,50,000/- together withinterest @ 7.5 % per annum till the date of the decree and @ 6% perannum from the date of the decree till realisation.

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12. The respondents filed two second appeals in RSA Nos.6134of 2015 and 130 of 2016. Both the second appeals were allowed by theHigh Court by a Judgment and decree dated 20.03.2018 resulting in thedismissal of the 2 money suits filed by the appellant. Not stopping withthe mere allowing of the appeals, the High Court went a step further byFdirecting the appellant to refund the amount of Rs.55,00,000/- paid bythe respondents, by virtue of the order passed in the anticipatory bailapplication, together with interest @ 7% per annum. It is against thesaid common judgment that the plaintiff-appellant has come up with theabove appeals.

G13. The Contention of the Shri Rajiv Bhalla, learned counsel forthe appellant is that the trial Court as well as the High Court wentcompletely on a wrong track by accepting the plea of full and finalsettlement set up by the respondents and that the High Court wentoverboard in passing an order for refund of money paid in the proceedingsfor grant of anticipatory bail.H

ANITA RANI v. ASHOK KUMAR & ORS.[V. RAMASUBRAMANIAN, J.]

14. Per contra, it is contended by Mr. Nidhesh Gupta, learnedsenior counsel for the respondent that the failure of the appellant toimplead her son as a co-plaintiff or atleast to examine him as a witness,coupled with her own admissions as PW-2, falsified her case. Once itwas found that the payments to the respondents were authorized andonce it was established through third party mediators that there was asettlement, the appellant-plaintiff was bound to fail and that therefore,the judgment of the High Court does not warrant any interference.

15. We have carefully considered the rival contentions and havealso gone through the pleadings, evidence and the Judgments of all thethree Courts.

16. As we have seen earlier, the first suit was for recovery of asum of Rs.5,50,000/-, which remained unrefunded, out of the amount ofRs.10,50,000/- allegedly paid by way of loan. The receipt ofRs.10,50,000/- by way of cheque No.459745 dated 18.11.2003 wasadmitted by the respondents. Similarly the re-payment of Rs.5,00,000/-by the respondents to the plaintiff-appellant on 7.08.2006 is admitted bythe appellant. The only defence set up by the respondents was that thepayment of Rs.5,00,000/- made by them on 7.08.2006 was by way offull and final settlement. To show that there was a full and final settlement,the respondents examined two third party mediators. But no receipt wastaken by the respondents from the appellant that the payment ofRs.5,00,000/- on 7.08.2006 was in full and final settlement. There wasalso no written memorandum of compromise/settlement. When paymentof a certain amount of money and the repayment of only a portion of thesame are admitted, the party pleading that such a part repayment was infull and final settlement, has a huge burden cast upon him to show thatthere was a settlement. Oral evidence of the so called third partymediators, is not sufficient to establish full and final settlement, in casesof this nature, where all transactions have happened only through bankingchannels and the defendants claimed that there were businesstransactions. It is unbelievable that the respondents, who reached sucha settlement, failed to have the same recorded in black and white, eitherin the form of a memo or in the form of a receipt.

17. Interestingly, Exhibit D-3 filed by the respondents is an affidavitpurportedly signed and verified by the appellant’s son on 8.03.2006, bothon his behalf and on behalf of his mother (the appellant), agreeing totreat a sum of Rs.30,00,000/- paid by the appellant, as a payment made A

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Aout of love and affection. If, on 8.03.2006, the appellant and her sonwere gracious enough to treat a huge amount of Rs.30,00,000/- as onemade out of love and affection, there could have been no occasion for adispute requiring mediation at the intervention of third parties, on 7.8.2006,resulting in the payment of Rs.5,00,000/- by the respondents to theappellant in full and final settlement. Unfortunately, all the three CourtsBfailed to juxtapose these two events which happened in an interval offive months, to see through the game.

18. In simple terms, the case of the appellant-plaintiff in the firstsuit was one of lending and non-payment. The defence set up by therespondents was one of payment of a lesser amount (than the originalCamount), in full and final settlement. A party who admits receipt of certainamount of money on a particular date and pleads discharge by way of afull and final settlement at a latter date, is the one on whom the onus lies.This onus was not discharged by the respondents in the first suit and,hence, the plaintiff was entitled to succeed in the first suit. The HighDCourt completely overlooked this aspect.

19. Coming to the second suit, the case of the appellant-plaintiffwas that various amounts of money were either withdrawn from ortransferred out of their accounts, by the defendants unauthorisedly andthat the amounts so taken away totaled to Rs.54,50,000/-. The defenceEof the respondents was that the amounts represented authorizedpayments for the purchase and sale of properties in a real estate businessand that out of those amounts, a sum of Rs.30,00,000/- was treated as apayment made out of love and affection.

20. Let us assume for a moment that the amount of Rs.54,50,000/F- either withdrawn or transferred from out of the account of the appellantby the respondents represented authorized payments, made by theappellant towards investment in real estate business. In such a case, therespondents are obliged to produce the accounts of the real estate businessand show how those amounts were accounted for. The respondentscould not produce any books of account. Therefore, the respondentsGthought it convenient to claim that all those amounts were investments ina real estate business and that a portion of it was agreed to be treated asa gratuitous payment. Investments in business dealings and gratuitouspayments do not normally go together. As in the first case, the flow ofmoney from the account of the appellant-plaintiff into the respondents’Haccount is admitted. While the appellant-plaintiff termed such a flow of money as unauthorized withdrawal /transfer, the respondents claimedthe same to be part of investment in real estate business. In the light ofsuch a defence, the onus, even in the second suit, was on the defence toshow that there were business dealings and that the amount stoodcompletely accounted for. No books of accounts were produced by thedefence to show that the amounts that flowed out of the plaintiff’s bankaccount were absorbed and accounted for within business.

21. Exhibit D-3 affidavit is a very curious document whoseadmissibility itself is questionable. It starts with a solemn affirmationreading “We Anita Rani,…. and Sulabh Singla… do hereby solemnlyaffirm and declare as under”. But it is signed only by Singla. Accordingto this affidavit, sworn on 8.03.2006, the appellant-plaintiff and her sonhad given Rs.30,00,000/- to the respondents out of love and affection.The affidavit goes further to say that there was no transaction betweenthe deponents and the respondents. This affirmation allegedly made on8.03.2006 that there was no transaction between them, stands in contrastto the claim of full and final settlement made on 7.08.2006.

22. In a suit for recovery of money, a defendant admitting thereceipt of money but pleading that the same was a gratuitous payment,is obliged to prove that it was a gratuitous payment. As a matter of factExhibit D-3 affidavit dated 8.03.2006 does not use the expression“gratuitous payment”, but uses the expression “love and affection”.But this affidavit also states that there was no transaction between thedeponents and the respondents. Thus while placing reliance upon thisaffidavit, the defendants actually pleaded a mutually contradictory case,as reflected in paragraph 8 of the written statement which reads asfollows:

“It is added that from the aforesaid amount, a sum of Rs.30.00 lacs was given by the plaintiff to the defendants out oflove and affection being near relations and there was notransaction between plaintiff and defendants to that effect.Suit for recovery of the amount against the defendant by theplaintiffs is not maintainable as the defendants are under nolegal obligation to pay back the amount to the plaintiff. Thedefendants never borrowed the amount nor are under anyobligation to pay back the amount to the plaintiff. Copy ofthe affidavit is attached herewith. Subsequently, the defendantshad settled their accounts pertaining to sale purchase of A

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Aproperties jointly as well as other properties purchased inorder to run property dealer business and a sum of Rs. 5.00lacs was paid to the plaintiff on 7.8.2006 in full and finalsettlement of her claim through cheque dated 7.8.2006 andthe said cheque has been encashed by the plaintiff. The saidcompromise was got arrived at by the intervention of ShriBSatish Kumar, S/o Shri Om Parkash, Prem Raj Aggarwal S/oShri Dev Raj Aggarwal and Shri O.P. Gupta S/o Shri RaghuNath Gupta. The plaintiff accepted the said cheque of a sumof Rs. 5.00 lacs in adjustment/settlement of all the accountswith regard to the amounts taken in satisfaction of her claimCfully and finally.

23. If as per the above pleadings and Ex. D-3, there was notransaction, but a huge amount of Rs.30,00,000/- was treated on 8.03.2006as a gratuitous payment, there was no occasion for the settlement ofany accounts on 7.08.2006 resulting in a full and final settlement of theDclaim.

24. If the parties have had business dealings from the year 2001-2002, it is hard to believe that a part of the amounts that flowed out ofthe account of the plaintiff, was out of love and affection. The onlypiece of evidence on the basis of which the gratuitous nature of paymentEis sought to be proved is Exhibit D-3, but it does not contain the signatureof the appellant. Therefore, the plea of gratuitous payment is unbelievableand was not established by the respondents.

25. Once the plea of gratuitous payment falls to the ground, Section70 of the Indian Contract Act, 1872 will come into play. Section 70reads as follows:-F

“70. Obligation of person enjoying benefit of non-gratuitousact.- Where a person lawfully does anything for anotherperson, or delivers anything to him, not intending to do sogratuitously, and such other person enjoys the benefit thereof,Gthe latter is bound to make compensation to the former inrespect of, or to restore, the thing so done or delivered.”

26. As held by this Court in the State of West Bengal vs. B.K.Mondal & Sons[1], Section 70 is based on the premise that somethingwas done by one party for another and that the work so done voluntarily, H1 AIR 1962 SC 779

was accepted by the other. Therefore, as a corollary, the plea that therewas a subsisting contract in the nature of business transactions, isantithetic to the very essence of section 70. This is why section 70 formspart of Chapter V of the Indian Contract Act, which is titled as “Ofcertain relations resembling those created by contract”.

27. As pointed out earlier, the respondents have admitted that themoneys as claimed by the appellant-plaintiff were either paid by theplaintiff or flown out of the plaintiff’s account into their own account.Therefore, the onus was actually on the respondents to prove either adischarge by way of settlement of accounts or the gratuitous nature ofthe payment. The respondents miserably failed to discharge the onus ofproof so cast upon them. Hence, the plaintiff-appellant is entitled to adecree despite a few discrepancies in her evidence, especially when thediscrepancies have no bearing upon the payment/flow of monies fromthe plaintiff to the defendants.

28. In view of the above, the appeals are allowed. The Judgmentand decrees of the High Court are set aside and the Judgment and decreesof the First Appellate Court are restored. In other words, there will be adecree in both the suits, as per the Judgment of the District Court,Chandigarh dated 18.03.2015 in Civil Appeal Nos.903 and 1056 of 2013.The appellant will be entitled to costs in these appeals which we quantifyat Rs.50,000/-. The amount deposited by the appellant pursuant to theOrder passed by this Court on 18.05.2018 and deposited in an interestbearing fixed deposit pursuant to the Order passed by this Court on14.12.2018 shall be released by the Registry to the appellant togetherwith the accrued interest.

Devika Gujral

Appeals allowed.

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