Recovery Suit was rightly dismissed as appellant couldn’t produce evidence to prove transaction of loan

Case Details: [2022] 140 taxmann.com 27 (Karnataka) Pawan Ahuja v. Saravana Alloy Steels (P.) Ltd.

Judiciary and Counsel Details

• • Dr H.B. Prabhakara Sastry, J.
  • Ramesh Chandra & Smt. K. Geetha, Adv. for the Appellant. 
  • Tarun A.N. for the Respondent.

Facts of the Case

In the instant case, the defendant, a director of Private Limited Company approached the plaintiff and borrowed a sum of Rs. 20 lakhs for their business purpose agreeing to repay the loan amount together with interest thereupon at the rate of Rs. 1.90 percent per month.

It was the case of the plaintiff that towards the repayment of the said loan amount, the defendants had repaid a sum of Rs. 2 lakh each on 5 dates, in all a total sum of Rs. 10 lakhs. The defendants had also paid a sum of Rs. 1.98 lakh towards interest in favor of the plaintiff. However, the defendants failed to pay the balance principal amount of Rs. 10 lakhs and interest thereupon.

Appellant further submitted that respondents had issued three cheques, towards repayment, however, those cheques were dishonored when presented for realization.

The Appellant made several requests for repayment of the loan amount, but since respondents did not repay the loan amount, the appellant instituted a suit claiming a total sum of Rs. 14.12 lakhs.

The Trial Court dismissed the suit of the appellant. It was found that though the appellant had sufficient materials, more particularly, documentary proof like his bank passbook, statement of account, register, etc., to show the transaction of the loan with the defendants, admittedly, he had not produced any one of them. Therefore, an adverse inference could be drawn to affect that contention of the appellant that he had given a loan to the respondent through a cheque, did not appear to be true.

Appellant claimed that respondents had issued three cheques, towards loan repayment, however, there was no evidence to show that cheques were presented for realization and same had been dishonored by the drawee bank, it could not be held that appellant as a payee in cheque had charged drawer, as per section 72 and consequently, since he had not presented the cheque, it could not be held that respondents had acknowledged debt as such extending limitation under section 18 of Limitation Act

High Court Held

On appeal, the High Court held that three cheques did not go to show that limitation had been extended, then, even according to the appellant, alleged loan being of date 19-4-2013 and admittedly date of filing original suit in trial Court being 22-3-2017, which was beyond three years from the date of arisal of cause of action, thus, the suit was hopelessly barred by limitation.

List of Cases Referred to

• • Smt. Savithramma R.C v. Vijaya Bank AIR 2015 Kar. 175 (para 13)
  • Hindustan Apparel Industries v. Fair Deal Corpn. AIR 2000 Guj. 261 (para 18).