Pradeep Nandrajog, J.
1. This is an action by the plaintiff for recovery of Rs. 15 lacs stated to have, been advanced by way of loan to the defendants together with accrued interest thereon.
2. Case pleaded by the plaintiff is that defendants No. 1 and 2 who are father and son respectively approached him for a loan and agreed to pay interest @ 22% per annum. On 18.11.2000, loan in sum of Rs. 10 lacs was given to defendant No. 2. A promissory note was written by defendant No. 2 in his hand and was signed by both defendants acknowledging receipt of loan in sum of Rs. 10 lacs; further acknowledging that interest payable on the loan would be @22% per annum. Further, defendants requested for another loan of Rs. 5 lacs. Plaintiff advanced another sum of Rs. 5 lacs. It was agreed that this component of loan would carry interest @20% per month. Defendant No. 1 acknowledged receipt of the loan as also interest payable by executing a writing dated 4.3.2001. That on 1.12.2001 a cheque in sum of Rs. 1.1 lacs was issued by defendant No. 1 to partially repay the ' interest which had accrued on the two sums taken by way of loan. The cheque was dishonoured when presented for encashment. A complaint invoking Section 138 of the N.I. Act is stated to be pending in the court of Shri V.K. Goel, M.M. That 3 cheques in sum of Rs. 5 lacs each dated 1.3.2002 were issued by the defendants to the plaintiff for return of the loan. Said cheques, when presented for encashment were dishonoured.
3. It is stated by the plaintiff that though he is entitled to interest @20% per month on the second loan amount, plaintiff was restricting interest to 22% per annum.
4. Suit seeks recovery of Rs. 23,61,665/- being Rs. 15 lacs as the principal amount and Rs. 8,61,665/- as interest. Break up of the interest is as pleaded in para 11, which reads as under:
11. That the defendants are liable to pay the principal amount of Rs. 15, lacs and interest at the rate of 22% p.a. from 18.11.2000 on Rs. 10 lacs and from 4.3.2001 on Rs. 15 lacs i.e. Rs. 64,165 plus Rs. 7,97,500/- total Rs. 8,61,665/- till 3.8.2003. Hence this suit for recovery of Rs. 15,0000 (as principal amount and Rs. 8,61,665 (as interest) totalling of Rs. 23,61,665/-. Th suit for recover is without prejudice to the criminal complaint filed by the plaintiff.
5. Defendant No. 1 has set up a defence by pleading that plaintiff was having friendly relations with him. That he stated that he was having financial difficulties and requested that if defendant No. 1 could issue cheques to him, he could use the cheques for arranging temporary finances by getting them discounted or arranging a loan from his banker on the basis of his cheques. In furtherance of said request, keeping in view the cordial relations, defendant No. 1 issued blank cheques as also handed over blank, pre signed letter heads.
6. It is further stated that defendant No. 1 is a partner of a firm called S.L. Prakashan. Plaintiff is in-charge of M/s. Delhi Paper Products Company Pvt. Ltd. That S.L. Prakashan had to receive Rs. 1.43 lacs from M/s. Delhi Paper Products Company Pvt. Ltd. and since defendant No. 1 was asking for said payment, plaintiff misutilized the cheques handed by defendant No. 1 to him.
7. It is further stated that on 25.5.2001, M/s. Delhi Paper Products Pvt. Ltd: paid Rs. 30,925/- to S.L. Prakashan. From said payment, defendant No. 1 seeks to infer that if plaintiff was to receive money from defendant No. 1, but paid Rs. 30,925/- where was the occasion to pay money to S.L. Prakashan.
8. Defendant No. 2 has pleaded that defendant No. 2 signed certain blank documents at the asking of his father and that these have been misutilized by the plaintiff to create, two acknowledgments referred to in the plaint.
9. On the pleadings of the parties under noted issues were framed vide order dated 17.5.2005:
1. Whether plaintiff advances a sum of Rs. 15 lacs as commercial loan to the defendants as mentioned in para No. 2 and 3 of the plaint?
2. Whether defendants executed any promissory note as pleaded in para 3 of the plaint?
3. Whether the cheques were issued by the defendants in favour of the plaintiff under the circumstances as pleaded in para X of the preliminary submissions in the written statement?
4. To what amount towards principal and interest, is the plaintiff entitled and at what rate?
5. Relief?
10. Thereafter, vide order dated 2.2.2006 further three issues were framed:
(i). The suit of the plaintiff is barred under the Punjab Registration of Money Lenders Act, 1938.
(ii). The suit of the plaintiff is barred under Sections 69A and 69B as well as under Section 269 SS of the Income Tax Act.
(iii). The suit is without cause of action inasmuch as no cheque or promissory note was issued by the defendant No. 1 in the name of the plaintiff.
11. Plaintiff has examined himself as his witness. Defendants have examined himself as their witnesses.
12. In his examination-in-chief, plaintiff has reiterated what he has pleaded in the plaint. Writing dated 18.11.2000 signed by the defendants recording receipt of Rs. 10 lacs has been proved as Ex.PW-1/1. The same reads as under:
I owe you
This is to confirm Araan Bajaj S/o Sh. P.K.Bajaj R/o A-5, Mayapuri, New Delhi-110064 owe amount of Rs. Ten lacs 10,0000/- only which shall be paid back by me along with 22% Twenty two percent interest p.a. within a period of six months from today dated 18.11.2000 the Interest amount of Rs. 18,333/- eighteen thousand three hundred thirty three only shall be paid by first week of every month.Sd/- Sd/-(P.K. BAJAJ) (AMAN BAJAJ)
13. The second writing dated 4.3.2001 signed by defendant No. 1 has been proved as Ex.PW-1/2. The same reads as under:
Received Rs. Five Lacs which shall be returned back after six months. Monthly interest @ 20% shall be paid.
Sd/-
(P.K. BAJAJ).
14. Cheque issued by defendant No. 1 in sum of Rs. 1.1 lacs in favour of the plaintiff has been proved as Ex.PW-1/3. Return memo has been proved as Ex.PW-1/4. Legal notice dated 9.2.2002 served upon defendant No. 1 under Section 138 of the N.I. Act pertaining to cheque Ex.PW-1/3 has been proved as Ex.PW-1/5. The three cheques in sum of Rs. 5 lacs each bearing the date 1.3.2002 issued by defendant No. 1 and payable to the plaintiff have been proved as Ex.PW-1/7, Ex.PW-1/9 and Ex.PW-1/11.
15. Return memo pertaining to the three cheques have been proved as Ex.PW1/8-A, Ex.PW-1/10-A and Ex.PW-1/12. Three legal notices each dated 8.4.2002 pertaining to the three cheques Ex.PW-1/7, PW-1/9 and PW-1/11, when said cheques were returned have been proved as Ex.PW-1/13 to Ex.PW-1/15.
16. In his cross examination, plaintiff admitted that while filing his income tax returns he did not reflect the loans advanced. He denied the suggestions that blank cheques were issued to him. However, he admitted that writing on the cheques (to fill up the cheques) is in his hand.
17. Defendant No. 1 in his deposition deposed as per stand taken in the written statement. He maintained that the cheques were issued blank as also the two writings acknowledging receipt of money from.the plaintiff were signed blank.
18. Defendant No. 2 likewise supported his father, but qua Ex.PW-1/1 denied his signatures thereon.
19. Afore-noted is the totality of evidence led by the parties.
20. As noted above, defence taken by the defendants is that the cheques and the documents were signed blank. Onus obviously is on the defendants to so establish.
21. There is a presumption in favour of the plaintiff that a document is presumed to be filled before it is signed.
22. In this connection, testimony of defendant No. 2, during his cross examination becomes important. When confronted with his signatures on Ex.PW-1/1 at point 'Y', he denied the same. Further, when confronted with the handwriting on Ex.PW-1/1, he denied the same.
23. When confronted with his pleadings in the written statement in para 1 of the reply on merits wherein defendant No. 2 has pleaded as under:
It is submitted that the plaintiff was having certain business dealings with the defendant No. 1 and the documents filed by the plaintiff along with the present suit were signed in blank and were given by the answering defendant to his father, defendant No. 1, as it was told by the father of the answering defendant that those documents were required for the purposes of arranging certain short terms/temporary finances by the Plaintiff and it was in good faith, the answering defendant signed the same and handed over them to the defendant No. 1 and when a dispute arose between the Plaintiff and the defendant No. 1, the Plaintiff has filed the present suit and another criminal case against the answering defendant merely to twist the arm of the defendant No. 1 and to pressurise him so that the settles the matter at the terms of the Plaintiff.
defendant No. 2 did not give any answer. His evidence records a court observation that defendant No. 2 maintained a silence for over 30 seconds.
24. Theory propounded by the defendants that defendant No. 1 issued blank cheques to enable plaintiff to raise a loan from a bank or raise finances by discounting the cheques does not find favour with me as in said eventuality there would be no requirement for the defendants to have executed acknowledgments Ex.PW-1/1 and Ex.PW-1/2.
25. Further, anyone who would have purchased the cheques on a discount would have got the cheques encashed in his name and would have presented, for encashment, the three cheques.
26. Further, defendants have not explained the cheque dated 1.12.2001 in sum of Rs. 1.1 lacs (Ex.PW-1/3).
27. If defendants have issued the cheques as pleaded by them, where was the requirement for them to acknowledge that they would repay the loan amount with interest at the rates mentioned in Ex.PW-1/1 and Ex.PW-1/2.
28. Further, defendant No. 2 has palpably deposed falsely when, during evidence he denied even his signatures at point 'Y' of Ex.PW-1/1, forgetting that in the written statement he had taken a stand that at the asking of his father he signed on a blank paper.
29. It would not be relevant to note that the four cheques relied upon by the plaintiff have been issued by defendant No. 1. If theory propounded by defendants was correct, there was no necessity of defendant No. 2 signing Ex.PW-1/1.
30. As regards signatures of defendant No. 2 on Ex.PW-1/1, a visual comparison of his signatures at point T with his admitted signatures on the written statements and affidavits show, even to a naked eye, that his signatures on point 'Y' in Ex.PW-1/1 are indeed his.
31. That M/s. Delhi Paper Products Pvt. Ltd. paid Rs. 30,925/- to S.L. Prakashan is neither here nor there for the reason where a party gives a personal loan, mere fact of a company in which the individual is a director making payment to a partnership firm of which defendant is a partner is neither here nor there.
32. In view of the analysis of the evidence, I propose to decide the issues.
33. Issue No. 1 framed on 2.2.2006 needs to be noted and decided against the defendants for the reason no evidence has been led by the defendants to show that the plaintiff is engaged in the business of money lending.
34. Under the Punjab Registration of Money Lenders' Act 1938, a money lender means a person or a firm carrying on the business of advancing loans. There is no evidence to show that the plaintiff is acting as a money lender.
35. Further, definition of loan in the said Act excludes a loan advanced by a trader to a trader in the regular course of business, in accordance with trade usage.
36. On issue No. 2 framed vide order dated 2.2.2006, suffice would it be to note that as held in the report published as : 2002 (8) SCC 31, Nutan Kumar and Ors. v. IInd Additional District Judge and Ors. unless a statute specifically provides that a contract contrary to the provision of the statue would be void, the contract would remain binding between the parties and can be enforced between the parties themselves. Consequences, if any other in law, would follow.
37. Learned Counsel for the defendants could not show any statutory provision under the Income Tax Act 1961 or any other law which stipulates that a loan transaction not recorded in the Income Tax Return or a loan transaction which is in violation of Section 69-A, 69-B or Section 269SS of the Income Tax Act would be void.
38. I accordingly hqld that the suit is not barred under Sections 69-A, 69-B or Sections 269SS of the Income Tax Act.
39. The third issue framed vide order dated 2.2.2006 and issues No. 1 to 3 framed vide order dated 17.8.2005 have to be decided, in light of the evidence noted above, and discussien on the defence. I hold that the plaintiff has successfully proved advancing of Rs. 15 lacs by way of loan to the defendants. Plaintiff has successfully proved that the three cheques in sum of Rs. 5 lacs each were towards return of the said loan taken. I accordingly hold in favour of the plaintiff and against the defendants on issues No. 1 and 3 framed vide order dated 17.8.2005 and on the third issue framed vide order dated 2.2.2006.
40. On issue No. 2 framed vide order dated 17.8.2005, learned Counsel. for the plaintiff conceded that the language of Ex.PW-1/1 and Ex.PW-1/2 does not render the two writings as validly constituted promissory notes. However, counsel correctly urged that the two writings show loan taken by the defendants and the interest which the loan was to bear, as recorded in the two documents. I accordingly hold that issue No. 2 framed on 17.8.2005 is of no consequence.
41. On issues No. 4 and 5 framed vide order dated 17.8.2005, inevitable conclusion has to be that the defendants would be liable to repay Rs. 15 lacs taken by way of loan from the plaintiff together with the interest at the agreed rate. Since plaintiff has restricted interest on the second loan amount of Rs. 5 lacs, I hold that the plaintiff is entitled to interest @22% per annum with effect from the date when the two loans were advanced.
42. On the relief, I decree the suit as prayed for. I further award interest to the plaintiff and against defendants during the period suit has remained pending and future interest @ 22% p.a. till date of receipt of the sum decreed.
43. The decree is passed against the defendants jointly and severally.
44. Plaintiff is held entitled to costs to be determined by the taxation officer.
45. Noting that the plaintiff has admitted not having shown the loans in the income tax returns filed by the plaintiff, I direct that at the time of execution of the decree, interest recovered would be paid to the plaintiff after deduction of tax as required by the income tax laws. TDS certificate would be supplied to the plaintiff and intimation thereof would be sent to the income tax authorities. I further direct that at the time of execution, plaintiff would disclose his permanent account number as also the ward in which the plaintiff files his return.
46. I note that pursuant to order dated 5.10.2005 a fixed deposit receipt in sum of Rs. 25 lacs has been deposited by the defendants in this Court. The registry would retain the said FDR and would abide by the directions which may be issued by the executing court or by the appellate court, should an appeal be filed against the present judgment and decree.
47. I note that record of proceedings in the court of Ms. Vrinda Kumari, M.M., Patiala House, Delhi and a criminal revision petition have been attached to the file of the suit. The said two records may, be forthwith returned to the courts concerned.