Jagdish Chander Gulati vs Usha Rani and Others

Pradeep Nandrajog, J.—Heard Learned Counsel for the parties.

The respondents sought a summary decree against the appellant, inter-alia, alleging that their predecessor-in-interest, late Shri Shiv Charan Singh advanced a loan in sum of Rs. 8,00,000/-(Rupees Eight Lakhs Only) to the appellant and that while accepting the loan, the appellant executed a promissory note acknowledging the loan recording therein that it was to be repaid with interest @ 24% per annum. It was alleged that a mortgage agreement was executed by late Shri Shiv Charan Singh affirming the receipt of the loan and recording therein that possession of the property mortgaged as also the title deeds were handed over as security for repayment, but actually neither was possession handed over nor were the title documents handed over; only photocopy thereof was supplied. Alleging that neither was the loan returned nor interest was ever paid, the suit was filed for recovery of Rs. 8,00,000/- (Rupees Eight Lakhs only), being the loan amount plus Rs. 5,84,416.43 (Rupees Five Lakh Eighty Four Thousand Four Hundred sixteen and paise forty three only) being the pre-suit interest.

Seeking leave to defend, the appellant stated that he had repaid the loan evidenced by the fact that possession of the mortgaged property was restored to him as also the title documents relating thereto. He stated that late Sh. Shiv Charan Singh, the predecessor-in-interest of the respondents, had very friendly relations with him and on said account when he returned the loan amount he did not bother to obtain the receipt in acknowledgement of the return of the loan.

In response to the application seeking leave to defend, the respondents clarified once again that notwithstanding it being recorded in the mortgage agreement that possession of the mortgaged property was handed over and that original title documents were handed over, the fact of the matter was that only photocopies of the title documents were received and possession was never received.

Declining leave to defend, learned Trial Judge has held that the appellants have not referred to any written acknowledgement by the appellant when stated loan was returned by him to late Sh. Shiv Charan Singh. Learned Trial Judge has held that no case was made out to grant leave to defend. The result is the dismissal of the application seeking leave to defend and the suit being decreed vide decree dated 17.5.2006.

It is urged in the appeal that the fact that possession of the mortgaged property is with the appellant and that the title deeds are in his possession are good evidence to show a triable defence raised entitling the appellant leave to defend the suit. It is urged that the explanation given by the respondents that the mortgage agreement records incorrect facts itself requires an adjudication post trial.

Learned Counsel for the respondents emphasized on the fact that the appellant has not produced any receipt or a document executed by late Sh. Shiv Charan Singh evidencing return of the loan.

From the respective version of the parties, it is but apparent, that they have transacted business in an in official manner. If late Sh. Shiv Charan Singh wanted a security for return of the loan in the form of a mortgage it is obvious that he would have obtained the original title documents. But, on the other hand, with respect to the conduct of the appellant it has to be noted that any prudent person would obtain a receipt when a loan is returned more so when, while taking the loan, written acknowledgements were given.

It is relevant to note that the appellant does not have a direct proof of the loan being returned. The projected defence is with respect to conduct of the parties where from an inference that the loan was returned is sought to be projected.

Under the circumstances, case is made out to grant a conditional leave to defend.

We dispose of the appeal setting aside the impugned judgment and decree dated 17.05.2006. Application filed by the appellant seeking leave to defend is allowed on the condition that the appellant would deposit within 8 weeks from today, with the Learned Trial Judge, a sum of Rs. 5,00,000/- (Rupees Five Lakhs Only). Said amount would be invested in a fixed deposit till the trial is over and would enure for the benefit of the successful party.

The appellant shall file a written statement within two weeks of the suit being restored before the Learned Trial Judge.

Parties are directed to appear before the District and Session Judge, Tis Hazari on 7th January, 2009 who shall direct the parties to appear before the learned Successor Judge.

No costs.

Copy of this order be supplied dasti to Learned Counsel for the parties.