AI Structured Summary
Not yet generated for this judgment
Judgment
Ms. S. Vimala, J.—The unsuccessful Plaintiff is the Appellant. The Plaintiff filed the suit for
(a) recovery of a sum of Rs. 18,61,105/- with 15% subsequent interest from the date of Suit till realisation and for other relief from the Defendants
based on a lease agreement dated 15.10.1997; and
(b) Personal and Mortgage decree against the fourth defendant and also for a direction to direct the fourth Defendant to pay a sum of Rs.
18,61,105/- with 15% subsequent interest, failing which, to order sale of the mortgaged property.
The brief facts:
The plaintiff''s Company is incorporated under the Companies Act and carrying on business of hire purchase and leasing with registered Office at
Puducherry and administrative Office at Madurai.
1.1. The first Defendant is a Partnership Firm of which D2 and D3 are its partners.
1.2. At the request of the Defendants, the Plaintiff entered into lease and hire purchase agreement in respect of lease and hire purchase of
machineries. The first defendant committed default in the payment of rental and hire amount. Therefore, the Plaintiff repossessed the machineries on
1.7.1997 and kept it in the premises of the first Defendant. Towards payment of arrears of rent and hire purchase of amount, the first Defendant
sold the land and building in favour of the Plaintiff under three sale deeds dated 3.7.1997, 4.7.1997 and 11.7.1997. Thus, the Plaintiff became the
owner of the property bearing Door No. 3/150, Sukumanickenpatti Village in Pazhani Taluk. Thus, the lease and hire purchase account stood
settled.
1.3. Subsequently, Defendants 2 and 3 requested for lease of machineries and accordingly, lease agreement came into existence on 15.10.1997.
The agreed rent was Rs. 2,89,792/-per month for the next 27 months ( Rs. 2,89,792/-x 27 = Rs. 78,24,384/-). The Defendants were given
licence to use the premises so long as the lease arrangement continues. In case of default in the payment of rent, 27% of additional lease charges (
Rs. 78,244/-) would be payable by the Defendants. The first defendant paid Rs. 45,000/- on 31.12.1997 and failed to pay the remaining amount.
Default in payment of rent for three consecutive months would ipso facto terminate the lease arrangement. In pursuance of that right, the Plaintiff
took possession of the machineries on 31.3.1998.
1.4. The fourth defendant is the guarantor, the deed of guarantee having been executed on 15.10.1997. The fourth defendant also deposited title
deeds of the immovable property with an intention to create equitable mortgage. Memorandum to that effect was executed on 16.10.1997.
1.5. The Plaintiff could not file the lease agreement dated 15.10.1997 as it was required to be produced before the Auditors for the finalisation of
accounts. Plaintiff was planning to produce it during the evidence. The sale consideration was adjusted only towards part of the liability. Hence, the
Suit.
The case of the defendants (D1 to D3):
The second defendant-Balasundaram, Thangavelu, Selvam and Geethalakshmi were partners of the first defendant''s Firm. They availed financial
assistance under the hire purchase scheme from the plaintiff for Rs. 5,00,000/-, Rs. 10,00,000/- and Rs. 20,00,000/- in or about 1996 for the
purchase of raw materials and machineries. In respect of that transaction, the immovable properties of the fourth defendant and third parties were
given as security by way of equitable mortgage by deposit of title deeds. Subsequent to the retirement of Thangavelu, Selvam and Geethalakshmi,
the third defendant joined in the partnership in or about 1996 - 1997. Under the hire purchase scheme, D1 to D3 had to pay a sum of Rs.
1,40,000/- per month for 36 months ( Rs. 50,40,000/-). D1 to D3 were able to pay the dues only for three months. Therefore, the Plaintiff
terminated the hire purchase scheme and repossessed hypothecated machines. Towards payment of arrears of rent and hire purchase amount, the
first defendant sold the land and building in favour of the plaintiff under three sale deeds dated 3.7.1997, 4.7.1997 and 11.7.1997. Immediately
after the settlement of dues, defendants 2 and 3 closed the business of first defendant''s Firm. The plaintiff also assured to release the properties of
the fourth defendant from security. Thereafter, the defendants have no business connection with the plaintiff. Neither there was oral agreement nor
there was any written agreement of lease dated 15.10.1997. defendants are not in possession of the building after the sale of the same to the
plaintiff. The alleged payment of Rs. 45,000/- as monthly rental on 31.12.1997 is untrue. The defendants did not receive any notice. The fourth
defendant did not give any guarantee for the alleged lease. The third defendant did not sign the letter dated 5.11.1997. The plaintiff is guilty of
forging the letter. The suit filed without the lease deed referred to in the plaint is not maintainable. The suit is not maintainable. Hence, it must be
dismissed.
The Trial Court has framed the following four issues:
(a) Whether the plaintiff is entitled to a decree as prayed for?
(b) Whether the fourth defendant is the guarantor and whether the fourth defendant is liable to pay the suit claim?
(c) Whether the plaintiff is entitled to a personal and mortgage decree against the fourth defendant?
(d) To what relief the plaintiff is entitled to?
It is the case of the defendants that they did not execute any lease agreement dated 15.10.1997 in respect of the machineries. It is the specific
case of the fourth defendant that he neither executed the deed of guarantee on 15.10.1997 nor executed a memorandum on 16.10.1997
evidencing deposit of title deeds.
The specific case of fourth defendant is that at the time of execution of sale deed under Exhibit A-1 to Exhibit A-3, the machineries and
properties were valued at Rs. 59,05,000/-and after discharging the amount payable to plaintiff i.e. Rs. 48,00,000/- there was a balance of Rs.
11,05,000/-; Rs. 1,00,000/- was payable by D1 to D3 towards loan amount taken from TIIC and after paying Rs. 1,00,000/- to TIIC, the
balance Rs. 10,05,000/- was paid to the second defendant. Thus, it is the case of the defendants that after discharging the entire liability of the
plaintiff by execution of sale deed (Exhibit A-1 to Exhibit A-3), the balance sale consideration was paid by the plaintiff to the second defendant by
way of cheque for a sum of Rs. 10,05,000/-.
5.1. But, it is the case of the plaintiff that the defendants 1 to 3 did not completely settle the amount payable under the first transaction and the
balance payable by the defendants 1 to 3 were waived by the plaintiff. After the execution of sale deed (A1 to A3) by the defendants, there was
no surplus payable by the plaintiff to the defendants and the payment made by the plaintiff, at that point of time to the second defendant was
towards a personal loan for a sum of Rs. 10,05,000/-.
The plaintiff examined P.W. 1 to P.W. 3 and marked Exhibit P-1 to Exhibit P-37. The defendants examined D.W. 1 to D.W. 7 and marked
Exhibit B-1 to Exhibit B-7. Exhibits C-1 to C-3 have been marked.
The Trial Court has given a finding that the defendants have discharged the entire loan payable prior to 15.10.1997. So far as the issue
regarding genuineness of the agreement dated 15.10.1997, the finding is that the plaintiff has not proved the same to be genuine. Rejecting the
claim of the plaintiff, the suit has been dismissed with costs of Dl to D4.
As against the dismissal, the present Appeal has been filed. The dismissal of the suit is under challenge on the following grounds:
(a) The Trial Court has failed to appreciate the fact that the respondents having admitted the execution of the documents, the onus of proving that
consideration had not passed would rest only on the respondents.
(b) The Trial Court has failed to see respondents 2 and 3/defendants 2 and 3 have admitted their signatures in Exhibit A-4 and it is not their case
that the same had been forged.
(c) The respondents are educated persons and their contention that they were made to sign several blank forms is totally unbelievable and neither
has this contention been proved by the respondents.
(d) The Trial Court failed to appreciate that Exhibits A-4, A-5 and A-15 clearly spell out its contents and the respondents who clearly admitted
that they had originally entered into three contracts have failed to offer an explanation as to why they had signed the fourth lease agreement.
(e) Second and fourth respondents have applied for a fresh electricity connection on 4.8.1997 and obtained electricity power connection in his
name on 20.11.1997 i.e. the period relating to the suit transaction and that too after the execution of Exhibits A-4, A-5 and A-15, which is clear
evidence of the fact, that respondents 1 to 3/defendants 1 to 3 entered into a fresh agreement after the sale of the mill premises.
(f) The evidence of D.W. 3 goes to show that EB Service connection No. 242 was obtained in the name of the first defendant and the application
was made by second defendant.
(g) That the power was consumed from 29.11.1997 to 17.3.1998 which is the period during which the present lease agreement was in existence.
(h) That D.W. 1 has specifically admitted in his evidence that he is in possession of electricity card with regard to S.C. No. 242 obtained by him in
the name of D1 for the mill premises sold to the appellant/plaintiff.
(i) That the respondents have not denied the Receipts of A17, 18 and 19 all of which would go to show the execution and existence of Exhibit A-
4-Lease Agreement.
(j) The Trial Court failed to appreciate the fact that the respondents herein who have admitted Exhibits A-4, A-5 and A-15 have not let in any
evidence whatsoever to prove that the consideration had not passed under the above said documents to them.
(k) In this regard, the Trial Court failed to appreciate that the respondents herein could have proved their case that the entire loan had been
discharged by them by producing their account books and the respondents having withheld the best evidence, the Trial Court ought to have drawn
an adverse inference against the respondents.
(l) The Trial Court has ignored the well established rules of evidence by throwing the onus of proof upon the appellants to prove passing of
consideration when execution has been admitted by the respondents.
(m) The Trial Court has overlooked one vital factor which would demolish the entire case of the respondents viz., the failure on the part of the
fourth respondent to obtain return of the document which according to them had been offered as security for the previous loan.
(n) The Trial Court failed to appreciate that if the plea of the fourth respondent is true, she would have in the very first instance issued a notice to
the appellant calling upon them to return the original documents.
(o) The Trial Court on the basis of the above facts and circumstances ought to have drawn an adverse inference of the fourth respondent
particularly when she has deposed as D.W. 3 that she was fully aware about the transactions between the appellant and the respondents.
(p) The Trial Court ought to have seen that the appellant is a Non-Banking Finance Company duly registered with the RBI and therefore, this
aspect must have been given due credence to.
(q) The Trial Court has failed to appreciate that the execution of Exhibit A-4 has not been denied by the respondents and therefore, the failure to
file it with the plaint cannot be a reason to reject the appellant''s case.
(r) The Trial Court has overlooked the fact that even with regard to the earlier contract the respondents were in arrears and to settle these debts,
they had sold their properties to the appellants and even with reference to this contract the respondents have committed default after paying three
instalments.
Admittedly, the plaintiff is the company registered under the Companies Act and the first defendant is the partnership Firm of which, defendants
2 and 3 are the partners (being the son and mother). The fourth defendant is alleged to be the guarantor for the loan obtained by the first defendant
Firm from the plaintiff. According to the plaintiff, there were two transactions, i.e. 1. the finance agreement under which, the plaintiff financed for
the machineries under lease cum hire purchase agreement and towards security, the properties belonging to D1, D4 and that of retired partner
Thangavel were offered as security. The monthly rent payable was Rs. 1,45,000/- for a period of 36 months and when the defendants fell in
arrears to the tune of Rs. 48,00,000/-, the defendants realising their financial constraint surrendered their machineries (under Exhibit A-31 and
Exhibit A-32), terminated the hire purchase agreement (under Exhibit A-29 and Exhibit A-30) and sold their properties (under Exhibit A-1 to
Exhibit A-3). By virtue of the sale, the entire amount payable by the first defendant Firm stood discharged.
9.1. It is the case of the defendants, that when the sale deeds under Exhibit A-1 to Exhibit A-3 were executed towards discharge of amount
payable under lease cum hire purchase agreement, there had been excess money over the loan payable and that was given to the defendants by
way of cheque. On the other hand, it is the case of the plaintiff that when A1 to A3 were executed, there was no excess money available after the
discharge of loan amount and what was paid to the second defendant was the personal loan. This subsequent transaction/conduct will be the
crucial one to be analysed to decide, whether, after the closure of first transaction whether the second transaction continued between the plaintiff
and the defendants or not. This issue would be discussed in the later part of the judgment.
So far as the first transaction i.e., lease cum hire purchase agreement is concerned, there is no serious contentions between the parties
excepting on a few aspects i.e., whether there was excess money available in the hands of the plaintiff which was over and above the amount
payable to them under the lease cum hire purchase agreement and whether the fourth defendant was a guarantor to the first transaction (as
contended by D4) or to the alleged second transaction (as contended by the plaintiff).
It is the case of the plaintiff that even though the defendants were financially and managerially unsuccessful after entering into lease cum hire
purchase agreement with them, leading to the extent of selling the property belonging to the first defendant''s firm to the plaintiff yet, the first
defendant firm proposed to start its business in the very same property, which was sold to the plaintiff and in pursuance of the same lease deed
dated 15.10.1997 (Exhibit A-4) came to be executed by the defendants 2 and 3 on behalf of the first defendant.
11.1. According to the terms and conditions of Exhibit A-4, the monthly rent payable was 2,89,792/- for a period of 27 months. The letter of
guarantee bears the same date i.e. 15.10.1997 marked as Exhibit A-5, The deposit of title deeds is said to have been made and evidenced through
execution of the memorandum of agreement dated 16.10.1997, which is Exhibit A-15.
11.2. It is the case of the plaintiffs that defendants 1 to 3 were running the mill under the renewed business commitment by virtue of the lease from
15.10.1997 and as the defendants did not pay the arrears of lease, the suit came to be instituted. But, it is the case of the defendants that there was
no need/occasion for a fresh lease arrangement as they have no intention of running any factory. The second defendant specifically denies the lease
agreement under Exhibit A-4. It is the specific case of fourth defendant that he neither executed the guarantee letter dated 15.10.1997 nor the
memorandum evidencing deposit of title deeds. The defence is that the signatures of the defendants were taken in blank papers and blank stamp
papers by the plaintiff at the time of original transaction i.e., lease cum hire purchase agreement and that has been misused by the plaintiff and the
documents i.e., A4, A5 and A15 have been fabricated.
The crucial documents which would through much light on the issue to be decided are Exhibits A-4, A-5 and A-15. It is the contention of
plaintiffs that they have proved execution of Exhibits A-4, A-5 and A-15 by examining the senior Manager of the plaintiffs company as well as the
Attestor to Exhibits A-4, A-5 and A-15 as well as another witness P.W. 3. It is the contention of the defendants that even though they have
examined seven witnesses and marked eight documents, the documents produced/evidence adduced on the side of the plaintiff would be more
than sufficient to establish the fact that the alleged lease transaction/alleged second transaction is totally false. It is seriously contended that Exhibit
A-4 speaks for itself in the sense that a mere perusal of Exhibit A-4 would prove that it could only be a forged and concocted document and not a
genuine document. Perusal and analysis of Exhibit A-4 creates doubt regarding the following aspects:
(a) Exhibit A-4 dated 15.10.1997-Lease agreement, Exhibit A-5-Agreement of guarantee and Exhibit A-15-Memorandum of deposit of title
deeds are the prime documents. Exhibit A-4 the prime document on which the case of the plaintiff stands was not filed along with the plaint, during
1998. Written statement of defendants 1 to 3 has been filed in 2001 and the written statement of fourth defendant has been filed in 2002. Till such
time, Exhibit A-4-Lease agreement was not filed. Therefore, the defendants filed an application (I.A. No. 173 of 2002) seeking dismissal of the
suit for non-production of lease agreement. Only, thereafter, the plaintiff has filed the lease agreement. It is contended by the learned counsel for
the plaintiff that the lease agreement could not be filed as it was with the Auditor and, therefore, the suit itself was prepared with the xerox copy of
the document. Even the xerox copy of the tease agreement was not filed along with the plaint. The suggestion of the defendants to P.W. 1-
Jeevanandham was that he signed in Exhibit A-4, just prior to the filing of the same into the Court in order to enable him to give evidence. Even
though, P.W. 1 has chosen to deny the suggestion, the circumstances indicate that the suggestion put by the defendants must be true, because, in
the typed set of documents filed by the appellant through their counsel Exhibit A-4 did not contain the signature of P.W. 1 whereas in the
document filed before the Court it contains the signature of P.W. 1. Therefore, the suggestion that Exhibit A-4 had been tailored just prior to the
filing of the document before the Court and that it had been done with a view to enable P.W. 1 to give evidence before the Court stands proved.
(b) Exhibit A-4 contains seven pages of which, the first page is the ten rupees stamp paper. This stamp paper has been issued on 22.2.1996
whereas the lease agreement is dated 15.10.1997. The lease agreement is signed by the plaintiff, D2 and D3 on every page. Baskaran who is said
to be attesting witness has signed only in Page Nos. 5, 6 and 7 i.e. those pages in which some space is available for him to sign.
(c) One more attesting witness Jeevanandam has signed only in the last page. It is not explained out of seven pages, why the witness Baskaran has
signed in three pages and other witness has signed in only one page while rest of them have signed in all the seven pages.
(d) The appearance of Page No. 6, wherein, there is a long gap between the last line written in the ink and signature of witnesses. (In between
serial Nos. 11 to 19 has been typed and left blank), creates sufficient suspicion regarding the genuineness of document.
(e) It is also pointed out even though Exhibit A-4 contains the signature of Baskaran and Jeevanandham in the typed set of papers under Exhibit A-
4 it did not contain the signature of Jeevanandham.
(f) The glaring difference in the ink with reference to the intensity/density between the signatures of Baskaran and Jeevanandham gives an
impression that both of them would not have signed at the same time but, there ought to have been considerable time gap. These difference
probabilise the contention of the defendants that the signature which was obtained in the blank paper in the original transaction ought to have been
misused by the defendants in fabricating Exhibits A-4, A-5 and A-15.
Now, the issue to be decided is whether the execution of Exhibit A-5 and Exhibit A-15 which are alleged to have been executed by the fourth
defendant has been proved.
13.1. It is the case of the fourth defendant that she put signatures in blank papers during the earlier transaction and that those signatures had been
misused by the plaintiff and Exhibit A-5 and Exhibit A-15 have been fabricated. This plea has been raised in paragraph 6 of the written statement.
The learned counsel for the plaintiff/appellant contended that during cross-examination, the fourth defendant has admitted her signature under
Exhibit A-15 and, therefore, the plaintiff has discharged the burden of proof regarding execution of Exhibit A-15.
13.2. Whether the fourth defendant has admitted the execution of Exhibit A-15 during the course of evidence is to be considered. It appears/it is
also a practice that the witness was shown the signature portion alone after hiding the content and she seems to have admitted the signature in
Exhibit A-15. Whether it will amount to admission of contents of the document is the issue. The learned counsel for the respondent has relied upon
the decision Perumal Vs. V. Balasubramanian, , whereunder, the practice of showing only the signature portion blocking rest of the document has
been deprecated. In the same decision it has been pointed out that even a well educated person might not have been in a position to identify his
own signature if it is shown to him in isolation. Therefore, from the stray admission made by the fourth defendant alone, it cannot be concluded that
Exhibit A-15 is genuine.
The learned counsel for the appellant has also relied upon a decision of the Supreme Court Thiruvengada Pillai Vs. Navaneethammal and Another,
, wherein, it has been held as follows:
While there is no doubt that Court can compare the disputed handwriting/signature/finger impression with the admitted handwriting/signature/finger
impression, such comparison by Court without the assistance of any expert, has always been considered to be hazardous and risky........
This decision will not apply to the facts of the case because it is not a case where the signature itself is under dispute. It is not the case of the
defendant that she did not sign in the document at all. The contention is that the signature put in the blank document has been misused and the
document has been fabricated. The more relevant issue arising for consideration is whether the signature was put on a blank paper or the party put
the signature after fully understanding the contents of the document. The denial is not that of the signature as such, but, the denial is that it was not
signed in a completed document. Therefore, there is no necessity at all to send the signature to the opinion of the handwriting expert. During the
course of evidence, the defendant has denied the signature in one document. Where the signature is not a complicated one, warranting the
assistance an expert and in the availability of admitted signatures it is not necessary to send it to the handwriting expert.
13.3. Petition has been filed in C.M.P. 591 of 2010 seeking to refer Exhibit P-4 and Exhibit P-26 to Forensic Department for comparison of
signature. No reason has been adduced as to why no such steps was taken before the Lower Court. Moreover, this is not a case where taking the
assistance of expert would be imperative. As discussed earlier, the holistic circumstances surrounding the entire document has been taken into
consideration in arriving at the genuineness of the document. Hence, C.M.P. No. 591 of 2010 is dismissed.
13.4. There is also one more reason as to why such admission should not be relied upon. The best person to speak about Exhibit A-15 is P.W. 1-
Jeevanandham. This is the version according to P.W. 2 who would state that the blanks in Exhibit A-5 and Exhibit A-15 were filled up only in the
handwriting of Jeevanandham. But, Jeevanandham has stated that he did not know anything about Exhibit A-5 and Exhibit A-15. The stamp for
these two documents are dated 9.7.1997, but, it has not been issued in somebody''s name.
13.5. Petition has been filed by the respondents in C.M.P. No. 1325 of 2010 for reception of additional evidence with regard to information
received by filing an application under RTI. In the supporting affidavit in para. 4, it is stated that even though the plaintiffs filed application seeking
information from RTI on 9.7.1997 and it has been furnished only on 23.7.2010, it could not be filed earlier before the Trial Court. As the non-filing
has been satisfactorily explained and also the documents relied upon are essential to decide the merits of the case, the petition in C.M.P. No. 1325
of 2010 is allowed.
13.6. From the documents filed in C.M.P. No. 1325 of 2010 (information through RTI), it appears stamp papers relating to Exhibit A-5 and
Exhibit A-15 had not been issued in the name of the plaintiff but, stamp paper numbering about thousand has been issued to some third parties in
Tuticorin. The plaintiff/appellant are in Madurai. There is no explanation as to why this stamp papers were purchased at Tuticorin. The absence of
name of the plaintiff/appellant on the stamp papers is also not explained. Under such circumstances, the inevitable conclusion is that Exhibit A-5
and Exhibit A-15 are not genuine documents.
Custody of original documents: It is the case of the fourth defendant that the documents deposited by her with the plaintiff for the earlier
transaction was not returned to her. Though it is denied by the plaintiff/appellant in the reply, it is admitted by P.W. 1 during cross-examination that
those documents of fourth defendant deposited in 1995 are continued to be in the custody of the appellant. For a transaction in 1997, definitely the
fourth defendant would not have deposited the document in 1995. It is also relevant to point out that even though the appellant claims that
documents had been returned by the appellant after 1.7.1997 with due acknowledgement, no document evidencing acknowledgement has been
filed. Therefore, the contention that papers submitted during earlier transaction might have been used to fabricate Exhibit A-5 and Exhibit 15 stand
probabilised.
C.M.P. No. 936 of 2010 has been filed by the plaintiff/appellant seeking to receive the memorandum of understanding dated 1.10.1997 alleged to
have been signed by the second defendant on 15.10.1997 as additional evidence. In paragraph 20 of the supporting affidavit, it is stated that
memorandum of understanding was kept in the file of the Vice President and therefore, it could not be filed earlier. This explanation is not
acceptable as it is the prime document without which the plaintiff would not have proceeded with the trial. Moreover, opportunity ought to have
given to the second defendant to speak about the signature, especially when she has chosen to deny her signature with respect to the suit
transaction. Therefore, at this stage the documents cannot be received. Hence, the C.M.P. No. 936 of 2010 is dismissed.
Then the next point to be considered is that whether the appellant handed over possession of the machineries to the custody of the defendants.
In order to establish lease of machineries it is essential to prove that the defendants 1 to 3 were in possession and enjoyment of the machineries.
Exhibit A-4 did not contain any recital regarding handing over possession of machineries to the defendants 1 to 3. There is no other separate
document evidencing handing over possession. Admittedly, when the earlier transaction was brought to an end by the sale of properties by Dl to
D3 in favour of the plaintiff, the machineries were re-possessed by the plaintiff (Exhibit A-29 to Exhibit A-33). Under such circumstances, the
plaintiff ought to have produced evidence to show that machineries were handed over in pursuance of the lease agreement. It is pertinent to point
out that P.W. 1 has admitted that the machineries were dismantled after re-possession on 1.7.1997. It is contended by the learned counsel for the
appellant that machineries were assembled on the date of Exhibit A-4 (15.10.1997) which is also the evidence of P.W. 1. Following circumstances
would indicate that the assembling of machineries on 15.10.1997 is improbable.
15.1. Electric supply to the machineries in the suit premises was disconnected on 16.11.1996. Admittedly, there was no electricity supply to the
premises since January 1997 as the defendants failed to pay the electricity charges. The application for restoration of electricity supply was made
by the first defendant on 4.8.1997. The deposit was made on 11.8.1997. Electricity supply has been resumed on 20.11.1997. Therefore, without
power supply, it is improbable that the defendants 1 to 3 would have agreed to commence the lease on 15.10.1997.
15.2. Admittedly, electricity charges to the tune of Rs. 20,000/- has been paid by the plaintiff covering the period 20.11.1997 to 17.3.1998
(Exhibit A-17). If the alleged lease arrangement is true and if really the defendants 1 to 3 were in possession and enjoyment as lessees, there is no
need for the plaintiff to pay the electricity charges, more especially, when as per the terms of Exhibit A-4, the lessee has to be pay the electricity
charges. Perusal of Exhibit B-5 and Exhibit B-6 relating to the earlier period shows that the average electricity bill comes to more than Rs.
50,000/-, when the machineries had been under use. Therefore, when the electricity bill comes around Rs. 20,000/-, the logical conclusion is that
the machineries would not have been under use. The evidence of D.W. 3 to D.W. 6 would also lend support to the above conclusion, when they
have deposed that the defendants 1 to 3 were not running the machinery and they had no business licences under commercial tax and sales tax
which are mandatory for Ginning Mill. Therefore, the conclusion is that the alleged lease arrangement cannot be true.
The learned counsel for the defendants pointed out that when the defendants have chosen to sell away their properties under Exhibits A-1, A-2
and A-3 dated 3/7, 4/7 and 11/7 of the year 1997, whether the defendants would have so chosen enter into lease agreement immediately after
three months i.e., on 15.10.1997 vide Exhibit A-4. This contention merits acceptance because under the original transaction the lease amount
payable is Rs. 1,45,000/- (for a period of 36 months) and under Exhibit A-4 transaction, the lease amount payable is Rs. 2,89,792/- (for a period
of 27 months). It is common knowledge that any prudent person would think twice before entering into a transaction involving double the
commitment ( Rs. 2,89,792/- payable per month) when he suffered a setback to the extent of selling the property, while under incapable of paying
Rs. 1,45,000/- per month. Therefore, when the defendants were admittedly a defaulter, it is improbable for the plaintiff to have agreed to lease the
machineries to the defendants that too even without a board resolution.
According to the plaintiff, defendants were liable to pay a sum of Rs. 2,25,000/- and another sum of Rs. 10,50,000/- on the date of Exhibit A-
This circumstance also is very crucial and it would improbablise the lease arrangement.
The plaintiff has come forward with inconsistent stand with reference to the discharge of old loan. In the plaint itself, the plaintiff has admitted
that the loan was discharged by the sale of properties under Exhibits A-1 to A-3 by the defendants 1 to 3 in favour of the plaintiff. But, in the
evidence the plaintiff has stated that the defendants were liable to pay a sum of Rs. 25,20,000/- even after the sale under Exhibits A-1 to A-3. For
the question why there was no recovery proceedings for the balance, the plaintiff has replied that he has chosen to waive the arrears to the extent
of Rs. 25,20,000/-. But, it is very strange to note that there is no resolution by the Board of Directors waiving the amount payable by defendants 1
to 3, which is evident from perusal of Exhibit A-27, which is the minutes of the Board of Directors of the plaintiff''s Company. With regard to
actual amount due from defendants 1 to 3, the Day Book and Ledger are the important documents, but, those documents were not produced.
The learned counsel for the plain-tiff/appellant contended that the lease arrangement under Exhibit A-4 is amply proved through payment of a
sum of Rs. 45,000/- in cash towards part payment of lease amount. In order to support the payment, the learned counsel for the appellant relies
upon entry in the passbook i.e., Exhibit A-35 and also entry in the cash book i.e., Exhibit A-36. The best evidence that would be available would
be the copy of the receipt issued to the second defendant from whom it is alleged to be collected, as the receipt alone would show the purpose for
which the amount was received.
Now, the next question to be considered is whether an equitable mortgage was created on 16.10.1997 under Exhibit A-15?
20.1. Under normal practice, whenever a property is mortgaged, the valuation of the property, opinion of the legal advisor and the encumbrance
certificate would be the relevant documents that would be considered. The property tax in respect of the fourth defendant''s house has been filed
as Exhibit A-11. The valuation certificate is filed as Exhibit A-34. The Tax receipt relating to the period 1993-1994 has been filed. The tax receipt
of the period relating to 1997 is not on record. The encumbrance certificate had been taken as per Exhibits A12, A13 and A14 only upto
February 1995. For the period 12.7.1997 to 16.7.1997 no encumbrance has been obtained. The resolution of the Board of Directors approving
the equitable mortgage has not been filed. All these circumstances, cumulatively taken together go to show that the contention of the plaintiff that
they returned the documents to the fourth defendant and it was redeposited by the fourth defendant as security in respect of the transaction
covered under Exhibit A-4 is not proved.
Exhibit A-4, A5 and A15, based on which the plaintiff has chosen to institute the suit have been found to be concocted documents. The case
of the defendants that blank papers which were signed during earlier transaction have been misused to create Exhibit A-4, A5 and A15 is amply
substantiated. The plaintiff has not established the suit and the Lower Court has rightly dismissed the suit. Therefore, the appeal fails and the appeal
is also dismissed. In the result, the appeal is dismissed with cost. The dismissal of the suit by the lower Court in O.S. No. 270 of 2000 is
confirmed. C.M.P. No. 1325 of 2010 is allowed. C.M.P. No. 591 of 2010 is dismissed. CM. No. 936 of 2010 is dismissed.