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M/s. Krishnam Raju Financial Consultancy Services, rep. by its alleged Proprietor Ch.Krishnam Raju & Another v/s S.P.Builders, rep.by its alleged Managing Partner S. Haneef

    C.C.C.A No.128 of 1998
    Decided On, 18 February 2013
    At, High Court of Andhra Pradesh
    For the Appellants: Hari Sreedhar, Advocate. For the Respondent: Rupendra Mahendera, Md. Yaseen Ali, Advocates.

Judgment Text
The defendants in O.S.No.631 of 1992 on the file of VII Senior Civil Judge, City Civil Court, Hyderabad are the appellants herein.2. The suit was filed for recovery of Rs.1,07,200/- alleging that the defendant No.2 is the proprietor of defendant No.1 consultancy, and there was an agreement between the plaintiff and the defendants that the defendants will arrange bank loans and deposits and the defendants obtained a sum of Rs.80,000/- from the plaintiff by way of a cheque dated 15.11.1990 and it was encashed. But subsequently, the defendants did not render any services and consequently the suit was filed for recovery of the amount with interest.3. The defendants had taken several pleas contending that the alleged agreement to provide deposits and loans through the banks is not valid. It was further pleaded that the plaintiff is known to the defendants and a hand loan of Rs.80,000/- was paid and in discharge of that hand loan, the cheque was issued and it was encashed. It was also pleaded that the person, who signed the plaint has no authority and the suit is not validly instituted and it was not registered and consequently the defendants are not liable to pay the amount.4. On the basis of the above pleadings, necessary issues have been framed for trail. On behalf of the plaintiff P.W.1 was examined and marked Exs.A1 to A6. On behalf of the defendants, no oral or documentary evidence was adduced. After considering the evidence on record, the Court below decreed the suit, and aggrieved by the same the present appeal is filed.5. The points that arise for consideration are:

1) Whether the defendants are not liable to pay the suit amount for the reasons mentioned by them?

2) Whether the judgment and decree of the Court below is legal and sustainable?


6. There is no dispute about the fact that the defendants have received a sum of Rs.80,000/- from the plaintiff by way of a cheque and it has been encashed. The dispute between the parties is as to whether the said payment was towards discharge of a debt due to the defendants or as an advance for the promised services to be rendered by the defendants.7. So far as the claim of the plaintiff is concerned, the said amount was paid as the defendants promised to provide loans and also bank deposits. The contention of the defendants is that the said agreement is not valid. However, it is to be noted that the 1st defendant’s firm run by the 2nd defendant is only for the purpose of rendering services and it is styled as consultancy.8. Therefore, in view of the above circumstances any amount paid towards the consultation charges cannot be said to be against the public policy or any valid agreement. In fact, it is not the case of the defendants that they were not doing any consultancy business. Even otherwise, if the deposits cannot be arranged from the bank, but still the loans can be arranged by virtue of consultancy and by processing, and therefore, it cannot be said as a contract not enforceable.

9. So far as the claim of the defendants is concerned, they have lent a sum of Rs.80,000/- to the plaintiff. In fact, the allegations in the written statement are so vague as to when the said amount has been lent and as to how it was paid. In the absence of such evidence, naturally, the plea of the defendants cannot be taken into consideration, and more so, when no oral evidence was adduced on behalf of the defendants.10. Relying the above deficiency, the learned counsel for the appellants tried to contend that the presumption under Section 139 of the Negotiable Instruments Act will come to aid and it shall be presumed that the cheque given by the plaintiff shall be in discharge of the debt due to the defendants.11. In order to appreciate this contention it is useful to refer Sections 138 and 139 of the Negotiable Instruments Act (for short 'the Act').

'138. Dishonourof cheque for insufficiency, etc., of funds in the account: - Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice to any other provision of this Act, be punished with imprisonment for a term which may extend to two years, or with fine which may extend to twice the amount of the cheque, or with both.

139. Presumption in favour of holder: - It shall be presumed, unless the contrary is proved, that the holder of a cheque received the cheque, of the nature referred to in Section 138 for the discharge, in whole or in part, of any debt or other liability.'12. A plain reading of the above provisions clearly go to show that the presumption under Section 139 of the Act applies only in cases where a prosecution has been laid under Section 138 of the Act for dishonour of the cheques, which were said to have been given in discharge of any whole or any part of the debt or other liability.13. In fact, in this case the Court is not dealing with a case of prosecution for dishonour and the aid of Section 139 of the Act cannot be taken by the learned counsel for the appellants when the language is clear. Therefore, it has to be held that the presumption under Section 139 of the Act has to be applied only to the cases referred to under Section 138 of the Act, which are cases of issuing a cheque for discharge of any liability and the dishonour thereof and in no other case the said presumption can not be drawn, since sufficient presumptions are provided under Section 118 of the Act with regard to negotiable instruments.

14. In this case, it is the specific plea of the plaintiff that it is a monitory transaction and towards advancement of the money, cheque has been given. Therefore, neither Section 138 of the Act nor Section 139 of the Act has relevancy, and the contention of the learned counsel for the appellant is not well founded.

15. The learned counsel for the appellant also contended that the person who signed the plaint has no authority and also he has no authority to give evidence. Though the firm was not registered by the date of issue of the cheque, but by the date of filing of the suit, the firm has been registered and Ex.A6-Partnership Deed has

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been filed in which P.W.1, who signed the plaint was shown as a partner of the firm and under Clause No.7, he is one of the Managing Partners along with two others, who are permitted to do the entire management of the firm. It does not show that all of them have to jointly do any transaction or represent the firm.16. Therefore, in view of the above circumstances, the plaintiff, being one of the Managing Partners, is competent to do business on behalf of the firm as per the expressed terms in Ex.A6. Therefore, I do not find any reason to interfere with the judgment of the Court below.Accordingly, the Appeal is dismissed. Miscellaneous petitions, if any, pending in this appeal shall stand dismissed. No order as to costs.