Skip to content


Essavi India Match Mfg. Co. Vs. Essabhai and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtKolkata High Court
Decided On
Case NumberAppeal No. 107 of 1970
Judge
Reported inAIR1974Cal330
ActsCalcutta High Court (Original Side) Rules, 1914 - Rule 9; ;Code of Civil Procedure (CPC) , 1908 - Order 37, Rule 3
AppellantEssavi India Match Mfg. Co.
RespondentEssabhai and anr.
Appellant AdvocateB.L. Jain, Adv.
Respondent AdvocateG. Chakravarti and ;P.K. Mallick, Advs.
DispositionAppeal partly allowed
Cases ReferredSm. Kironmovee Dassi v. Dr. J. Chatterjee
Excerpt:
- .....and the defendant no. 1 agreed to repay the said sum on demand with interest at the rate of 9 per cent per annum. the fact of these loans is not in dispute nor is it in dispute that a number of promissory notes by which the said respondent agreed to repay the loans with interest at 9% per annum were executed. the promissory notes, it may be noted were signed by the manager on behalf of the partnership firm. all these loans were made by cheques.3. the respondent's case is that the appellant in spite of demands failed and neglected to repay the said sum of rupees 3,50,000/- and on september 25, 1968 executed 7 hundies in favour of the plaintiff in substitution of the 7 promissory notes which had been executed before. the defendant no. 2 who is the respondent no. 2 before us accepted the.....
Judgment:

S.K. Mukherjea, J.

1. This is an appeal from an order made under Ch. XIIIA of the Original Side Rules by which Chose, J. directed the appellant to furnish security on or before April 30, 1970 for the sum of Rs. 1,00,000/- only to the satisfaction of the Registrar and in default passed a decree in terms of prayers (a) and (b) of the summons with the qualification that the interim interest and interest on judgment were to be on the principal sum of Rs. 3,50,000/- at 6 per cent per annum.

2. The facts of the case may briefly be stated. The respondent Mariam Shaik Essabhoy lent and advanced on diverse dates between November 24, 1967 and December 1, 1967, a total sum of Rs. 3,50,000/- to the defendant No. 1, a partnership firm and the defendant No. 1 agreed to repay the said sum on demand with interest at the rate of 9 per cent per annum. The fact of these loans is not in dispute nor is it in dispute that a number of promissory notes by which the said respondent agreed to repay the loans with interest at 9% per annum were executed. The promissory notes, it may be noted were signed by the manager on behalf of the partnership firm. All these loans were made by cheques.

3. The respondent's case is that the appellant in spite of demands failed and neglected to repay the said sum of Rupees 3,50,000/- and on September 25, 1968 executed 7 Hundies in favour of the plaintiff in substitution of the 7 promissory notes which had been executed before. The defendant No. 2 who is the respondent No. 2 before us accepted the said Hundies. Copies of the said Hundies have been annexed to the affidavit used as grounds of the summons.

4. The case of the respondent No. 1 is that on due date the Hundies were presented to defendant No. 2 for payment but they were dishonoured by non-payment, due notices whereof were given to the respondent No. 2.

5. In paragraph 6 of the plaint and in paragraph 8 of the affidavit used as grounds of the summons, the plaintiff has claimed Rs. 3,50,000/- by way of principal and Rupees 26,250/- on account of interest at the rate of 12% per annum from November 1, 1968 till June 1, 1969 aggregating Rs. 3,76,250/-.' By clause (a) of the summons, the plaintiff, claimed a decree for the said sum with interim interest and interest on Judgment.

6. The appellant, who was the defendant No. 2 in the suit, filed an affidavit but the defendant No. 2 (sic) did not file any. The defence is one of confession and avoidance. The confession is in the admission of receipt of the loan and the execution of the promissory notes and Hundies. The avoidance is in the defence that the loan was a benami transaction, that is to say, that the monies were advanced by the husband of the respondent No. 1, Abbasbhoy Shaikh Motabhoy, who is admittedly a partner in the defendant firm, that is to say, the defendant No. 1. It is the further case of the defendant No. 1 that this money was contributed by Abbasbhoy towards his share of the capital of the partnership firm. The books of account of the partnership firm have neither been relied on nor has any entry in the books been used in the affidavit to support the case that these monies were paid as and by way of contribution to the plaintiff's husband's share in the capital. There is no evidence that the plaintiff did not have means or was not likely to have the means of lending the monies on her own. There is only a bare allegation of a benami. There is nothing to enable the Court to come to the conclusion that there is a prima facie case of benami to go to trial. In any event, the suit is not only on the original consideration but also on the Hundis. It is settled law that in a suit on a negotiable instrument the Court will not go into questions of benami even if the Court could go into that question, in the absence of complete lack of affidavit evidence in support of benami the Court should not. In our opinion, take any notice of such a bare allegation unsupported by evidence.

7. A point was taken that the Hundis were executed by the manager who wasnot competent to execute them on behalf of the partnership firm. It is not a little curious that the Promissory Notes, the execution of which has not been challenged, were all executed by the same manager. It has not been disputed in the affidavit filed on behalf of the respondent No. 1 that the manager was competent to execute the Promissory Notes. In these circumstances the attack on the competency of the manager to execute the hundis must fail.

8. Learned counsel appearing in support of the appeal relied on certain observations made by Rankin. J. in Radha Kissen Goenka v. Thakursidas Khemka, 30 Cal WN 228 = (AIR 1926 Cal 713) to the following effect:

'Where there is a general denial of the main portion of the plaintiff's claim, unconditional leave to defend should be given and it is a wrong practice under Chapter XIIIA of the Rules of the Original Side to make an order for furnishing security merely because the Judge thinks that the plaintiff has a better prospect of success than the defendant.'

9. It will appear from a consideration of the facts of that case that these observations are referable only to those facts. There the affidavits disclosed a genuine case for accounting between the plaintiff and the defendant. The plaintiff admitted having received some monies. The question was not whether monies were received but how much was received by way of dividends. There was also no evidence in support of the plaintiff's claim for interest. In that view of the matter Rankin, J. came to the conclusion that that was a case where no security should have been ordered. In our opinion the case is of DO assistance to the plaintiff.

10. Learned counsel also relied on theoff-cited case of Sm. Kironmovee Dassi v. Dr. J. Chatterjee, AIR 1949 Cal 479. The tests prescribed by S. R. Das, J., as he then was, have not been disputed. The question is one of application of those tests in the facts and circumstances of a particular case. In the present case the defence as we have indicated is one of bare allegation of benami, even if the defence were a genuine one it could have been of no avail to the appellant in the suit so far as the suit is one on Hundis. In the absence of any particulars or any evidence, the defence, in our opinion, assumes character of moon-shine, to use the picturesque language of S. R. Das, J. A bare allegation unsupported by a shred of evidence is no defence at all and therefore the order of the learned Judge granting the appellant an opportunity to defend the suit on payment of security cannot be held to have been unjustified.

11. In one matter the learned Judge, in our opinion, has gone wrong i.e. in the matter of granting interest to the plaintiff at the rate of 12 per cent per annum. It appears from the Promissory Notes that interest waspayable at the rate of 9 per cent per annum. The Hundis which were executed on September 25, 1968, in substitution of the Promissory Notes are silent on the question of interest. In that view of the matter, in our opinion, it will not be proper to award interest at a rate exceeding the statutory rate of 6 per cent per annum. A conditional decree has been passed by the order for the sum of Rs. 3,76,250/-. The interest is reduced from 12 per cent which has been allowed by the learned Judge to 6 per cent. The decree will therefore, stand reduced to one for Rs. 3,63,125/-.

12. The order for payment of interim interest and interest on judgment will remain unaffected.

13. In the view we have taken the appeal is allowed in part. The order of the learned Judge is modified to this extent that in default of the said defendant firm furnishing such security as aforesaid within the time aforesaid a decree as of the date of the order shall be drawn up in favour of the plaintiff for the sum of Rs. 3,63,125/-. The order in terms of Clause (b) of the summons will remain.

14. All ad interim orders are hereby dissolved. The appellant will pay costs of this appeal.

S.K. Datta, J.

15. I agree.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //