(Prayer:Appeal Suit filed under Section 96 read with Order- XXXXI Rule 1 and 2 of Civil Procedure Code against the judgment and decree dated 17.07.2003 made in O.S.No.249 of 2001 on the file of the Additional District Judge cum Fast Track Judge No.1, Coimbatore.)
S. VIMALA, J.
1. 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.
2. 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.
2.1. The first Defendant is a Partnership Firm of which D2 and D3 are its partners.
2.2. 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 01.07.1997 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.
2.3. 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 31.03.1998.
2.4. 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.
2.5. 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.
3. 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 05.11.1997. 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.
4. 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?
5. 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.
6. The specific case of fourth Defendant is that at the time of execution of sale deed under Ex.A1 to Ex.A3, 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 (Ex.A1 to Ex.A3), 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/-.
6.1. 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/-.
7. The Plaintiff examined PW1 to PW3 and marked Ex.P1 to Ex.P37. The Defendants examined DW1 to DW7 and marked Ex.B1 to Ex.B7. Exhibits C1 to C3 have been marked.
8. 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 D1 to D4.
9. 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 Ex.A4 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 Exs.A4, A5 and A15 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 04.08.1997 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 Exs.A4, A5 and A15, 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 DW3 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 17.03.1998 which is the period during which the present lease agreement was in existence.
h) That DW1 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 Ex.A4-Lease Agreement.
j) The Trial Court failed to appreciate the fact that the respondents herein who have admitted Exs.A4, A5 and A15 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 DW3 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 Ex.A4 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.
10. 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 Ex.A31 and Ex.A32), terminated the hire purchase agreement (under Ex.A29 and EX.A30) and sold their properties (under Ex.A1 to Ex.A3). By virtue of the sale, the entire amount payable by the first Defendant Firm stood discharged.
10.1. It is the case of the Defendants, that when the sale deeds under Ex.A1 to Ex.A3 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.
11. 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).
12. 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 (Ex.A4) came to be executed by the defendants 2 and 3 on behalf of the first defendant.
12.1. According to the terms and conditions of Ex.A4, the monthly rent payable was Rs.2,89,792/- for a period of 27 months. The letter of guarantee bears the same date i.e. 15.10.1997 marked as Ex.A5. 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 Ex.A15.
12.2. 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 Ex.A4. 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.
13. The crucial documents which would through much light on the issue to be decided are Exs.A4, A5 and A15. It is the contention of plaintiffs that they have proved execution of Exs.A4, A5 and A15 by examining the Senior Manager of the plaintiff's company as well as the Attestor to Exs.A4, A5 and A15 as well as another witness PW3. 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 Ex.A4 speaks for itself in the sense that a mere perusal of Ex.A4 would prove that it could only be a forged and concocted document and not a genuine document. Perusal and analysis of Ex.A4 creates doubt regarding the following aspects: -
(a) Ex.A4 dated 15.10.1997-Lease agreement, Ex.A5-Agreement of guarantee and Ex.A15-Memorandum of deposit of title deeds are the prime documents. Ex.A4 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, Ex.A4-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 lease agreement was not filed along with the plaint. The suggestion of the defendants to PW1-Jeevanandham was that he signed in Ex.A4, just prior to the filing of the same into the Court in order to enable him to give evidence. Even though, PW1 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 Ex.A4 did not contain the signature of PW1 whereas in the document filed before the Court it contains the signature of PW1. Therefore, the suggestion that Ex.A4 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 PW1 to give evidence before the Court stands proved.
(b) Ex.A4 contains seven pages of which, the first page is the ten rupees stamp paper. This stamp paper has been issued on 22.02.1996 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 Ex.A4 contains the signature of Baskaran and Jeevanandham in the typed set of papers under Ex.A4 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 Exs.A4, A5 and A15.
14. Now, the issue to be decided is whether the execution of Ex.A5 and Ex.A15 which are alleged to have been executed by the fourth defendant has been proved.
14.1 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 Ex.A5 and Ex.A15 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 Ex.A15 and, therefore, the plaintiff has discharged the burden of proof regarding execution of Ex.A15.
14.2. Whether the fourth defendant has admitted the execution of Ex.A15 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 Ex.A15. 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 reported in PerumalVs. V.Balasubramanian (2011 (5) CTC 416), 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 Ex.A15 is genuine.
The learned counsel for the appellant has also relied upon a decision of the Supreme Court reported in (2008) 4 SCC, 530, (Thiruvengadam 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.
14.3. Petition has been filed in C.M.P.591 of 2010 seeking to refer Ex.P4 and Ex.P26 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.
14.4. There is also one more reason as to why such admission should not be relied upon. The best person to speak about Ex.A15 is PW1-Jeevanandham. This is the version according to PW2 who would state that the blanks in Ex.A5 and Ex.A15 were filled up only in the handwriting of Jeevanandham. But, Jeevanandham has stated that he did not know anything about Ex.A5 and Ex.A15. The stamp for these two documents are dated 09.07.1997, but, it has not been issued in somebody's name.
14.5. 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.
14.6. From the documents filed in C.M.P.No.1325 of 2010 ( information through RTI), it appears stamp papers relating to Ex.A5 and Ex.A15 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 Ex.A5 and Ex.A15 are not genuine documents.
15. 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 PW1 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 01.07.1997 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 Ex.A5 and Ex.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 proceded 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.
16. 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. Ex.A4 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 D1 to D3 in favour of the plaintiff, the machineries were re-possessed by the plaintiff (Ex.A29 to EX.A33). 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 PW1 has admitted that the machineries were dismantled after re-possession on 01.07.1997. It is contended by the learned counsel for the appellant that machineries were assembled on the date of Ex.A4 (15.10.1997) which is also the evidence of PW1. Following circumstances would indicate that the assembling of machineries on 15.10.1997 is improbable.
16.1. 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 04.08.1997. The deposit was made on 11.08.1997. 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.
16.2. Admittedly, electricity charges to the tune of Rs.20,000/- has been paid by the plaintiff covering the period 20.11.1997 to 17.03.1998 (Ex.A17). 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 Ex.A4, the lessee has to be pay the electricity charges. Perusal of Ex.B5 and Ex.B6 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 DW3 to DW6 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.
17. The learned counsel for the defendants pointed out that when the defendants have chosen to sell away their properties under Exs.A1, A2 and A3 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 Ex.A4. 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 Ex.A4 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.
18. 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 d
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ate of Ex.A4. This circumstance also is very crucial and it would improbablise the lease arrangement. 19. 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 Exs.A1 to A3 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 Exs.A1 to A3. 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 Ex.A27, 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. 20. The learned counsel for the plaintiff/appellant contended that the lease arrangement under Ex.A4 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., Ex.A35 and also entry in the cash book i.e., Ex.A36. 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. 21. Now, the next question to be considered is whether an equitable mortgage was created on 16.10.1997 under Ex.A15? 21.1. 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 Ex.A11. The valuation certificate is filed as Ex.A34. 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 Exs.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 Ex.A4 is not proved. 22. Ex. A4, 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 Ex.A4, 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. 23. 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. C.M.No.936 of 2010 is dismissed.