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S.Palani Velayudham v. T.G.Lavamoorthy - APPEAL SUIT NO.209 of 1986  RD-TN 904 (21 November 2002)
IN THE HIGH COURT OF JUDICATURE AT MADRAS
THE HONOURABLE MR.JUSTICE P.SHANMUGAM
THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM
APPEAL SUIT NO.209 of 1986
S.Palani Velayudham .. Appellant -Vs-
T.G.Lavamoorthy .. Respondent This appeal suit has been filed under S.96 of Code of Civil Procedure against the judgment and decree of the learned Subordinate Judge, Madurai dated 30.9.1985 and made in O.S.No.452 of 1982.
For Appellant : Mr.T.R.Mani
For Respondent : Mr.K.Srinivasan
The plaintiff is the appellant herein.
2. This appeal has been preferred by the plaintiff against the judgment and decree passed by the learned Subordinate Judge, Madurai dismissing the suit filed by the plaintiff in O.S.No.452 of 1982 for recovery of a sum of Rs.93,840/- with subsequent interest at 12 per annum on Rs.90,000/- from the date of plaint till realisation.
3. The plaintiff has presented the plaint with the following averments:
The plaintiff and the defendant were working as teachers in Thiagarajar Model Higher Secondary School. The other teachers, the plaintiff and the defendant were conducting a chit and also a welfare fund. Since the defendant, who was in sole management of the chit and welfare fund, left the management on 30.9.1980, the management was entrusted to the plaintiff from 1.10.1980. On assuming the management, the plaintiff scrutinised the accounts and found that a sum of Rs.90,000/- was taken by the defendant for his personal use, and thereby the defendant flouted the trust and confidence reposed on him by the teachers in general. When the plaintiff and other members approached the defendant to reimburse the said amount, he took an hostile attitude and refused to pay the same. The plaintiff has been paying the moneys from out of own funds till the matter was settled with the defendant. The other teachers also were negotiating with the defendant for settlement of the dues. Since the defendant was dragging on the matter, the plaintiff gave a criminal complaint to the police. While the said complaint was pending, the relatives of the defendant and the teachers on verification of the accounts, came to know that an amount of Rs.90,000/- was taken away by the defendant and used for his personal benefit. The defendant wanted two years' time to return the said amount, and he voluntarily executed an agreement on 5.8.1982 undertaking to pay the amount with interest at 12 per annum. The said agreement was executed without any coercion or threat. The withdrawal of the said complaint was was never intended to be a consideration for the said agreement, but was out of pity and leniency shown by the plaintiff towards the defendant so that he may not be deceived. Thus, the agreement was valid and binding on the defendant. The defendant also orally agreed to pay interest every month, and on his failure, the plaintiff has every right to recover the entire amount with interest. The defendant was trying to dispose of the property so that the plaintiff may not be in a position to realise the dues. A notice was sent to the defendant on 10.11.1982, and the same was received by him on 13.11.82. But, the defendant did not care to send any reply. The defendant is liable to pay Rs.93,840/- along with interest at 12 per annum on Rs.90,000/- till realisation.
4. The defendant filed a written statement with the following averments:
The plaintiff, the defendant, P.Jagannathan, P.N.Jothikrishnan, T.M.Mohanram and K.K.Chandrasekar as partners have started a chit fund in the name "Welfare Fund", wherein except K.K.Chandrasekar other partners have invested amounts equally. The said K.K.Chandrasekar, who was a working partner had not invested any amount. Loans were sanctioned to various persons from the fund. Its capital has grown up to Rs.30,000/- within two years. At the time when some of the borrowers did not repay the loan amounts with interest, the plaintiff undertook to collect the amounts and took the accounts in his custody. The said five partners took a loan of Rs.200/- every month from the chit fund conducted by the teachers of Thyagarajar Model Higher Secondary School and handed over the sum to the plaintiff for investment in the welfare fund. The plaintiff had kept the interest amount on the loans taken from the welfare fund. The defendant so far took loans up to Rs.30,000/- from the welfare fund. The welfare fund grew up to Rs.1,25 ,000/-. Court proceedings were initiated against Kannabiran, Kuppan and Perumal and moneys were collected from them. The moneys so collected has to be accounted in the welfare fund. Likewise, the moneys collected by P.Jagannathan from T.Thavamani were handed over to the plaintiff. The defendant was entitled to his share viz. Rs.31,000/- from the welfare fund. Since his share was not given to him, there arose a dispute between the plaintiff and the defendant. The defendant and the plaintiff never managed the welfare fund. Originally the welfare fund was managed by K.K.Chandrasekaran. Subsequently, the plaintiff managed the same. The defendant was never in charge of the said welfare fund. For the loans availed by the defendant, he remitted Rs.20,000/- on various dates. The defendant informed the plaintiff that if his share was given to him, he would repay the loan of Rs.30,00 0/- availed by him. The plaintiff threatened him with dire consequences at the Police Station. Out of fear, the defendant at the Police Station signed the agreement shown by the plaintiff, without making any other writings. The said agreement is not valid in law. Since the plaintiff threatened the defendant through police officials, the defendant could not send a reply. The said partnership is unregistered, and hence, the suit is not maintainable. In order to hide his fraudulent activities, the plaintiff has created a fake agreement and filed this suit. There is no cause of action for this suit. There is no need to sell the property owned by the defendant. The plaintiff alone has no legal right either to file a suit for recovery of the moneys due under the welfare fund. Hence, the suit has to be dismissed with costs.
5. The plaintiff filed a reply statement stating that the plaintiff never agreed to collect the moneys; that the defendant never borrowed any amount as alleged, but had misappropriated large amount; that the defendant was not entitled to any amount as alleged by him; that the defendant was in management, and the same would be revealed by his own account maintained by him and handed over to the plaintiff when he took management; that the agreement was entered in the school premises, and the police never had any intervention in the matter; that the defendant is estopped from questioning the agreement in any manner; that a counter part of the agreement was with the defendant; and hence, the plaintiff is entitled to get a decree as claimed by him.
6. In the additional written statements filed by the defendant, it is alleged as follows:
The defendant had not misappropriated any amount. He had not written any note. He never cheated anybody. As the contents in the notice sent by the plaintiff were false, the defendant did not send any reply. Deepavali Chit and Welfare Fund were managed by two independent persons in turn system. Both were never managed by a single person. The defendant had not paid any amount towards interest on Rs.90,000/-. On 9.4.82, Rs.2,700/- was given towards welfare fund investment. He had not executed any agreement. The plaintiff, the defendant, Mohanram and Jothikrishnan borrowed moneys from one Lakshmi Ammal on three occasions under pronote and discharged the loans. Thereafter, they along with K.K.Chandrasekaran and P.Jagannathan had started K.K. C. Welfare Fund. The said four partners along with P.Jagannathan started P.J.Welfare Fund. Rs.31,000/- has to be collected towards the welfare fund started by the four partners. Having fully well known that a suit before 5.8.84 cannot be filed, the plaintiff had filed the suit in the year 1982. Thus, the suit is not maintainable.
7. The trial Court framed the necessary issue. The plaintiff had examined himself as P.W.1 and also P.Ws.2 to 6, and Exs.A1 to A84 were marked on his side. Equally, the defendant had examined himself as D.W.1 and also D.Ws.2 to 5, and Exs.B1 to B6 were marked on his side. Exs.X1 to X9 and C1 to C12 were also marked. After scrutiny of the evidence both oral and documentary and the rival submissions, the trial Court dismissed the suit. Aggrieved plaintiff has brought forth the instant appeal.
8. The point for determination arises in this appeal is Whether the plaintiff is entitled to the suit claim based on Ex.A13 agreement?
9. The appellant/plaintiff filed a suit for recovery of a sum of Rs.93,840/- with subsequent interest on Rs.90,000/- alleging that the respondent/defendant was liable to pay the said sum under an agreement entered into between the parties on 5.8.1982.
10. Arguing for the appellant, the learned Senior Counsel Mr.T.R. Mani would submit that without appreciation of evidence on hand, the trial Court has dismissed the suit, that it is pertinent to note that the defendant has admitted his signature in Ex.A13 agreement, and hence, the burden is on him to show that the agreement was not true and valid and not supported by consideration; that though the defendant has not established the same, the lower Court has erroneously dismissed the suit; that the trial Court has decided the suit on the pleadings what were not available; that the lower Court though has rejected the additional written statement on the ground that it would cause prejudice to the interest of the plaintiff, went wrong in placing its entire conclusion on the averments made therein; that a perusal of the original written statement and the additional written statements would clearly reveal not only the inconsistent stand taken by the defendant, but also the falsity of the defence; that the defendant has not pleaded any turn system of management, but the trial Court has drawn so erroneously; that Exs.B1 to B3 were concocted documents to suit the convenience of the defence; that the only question that arose for consideration was whether the defendant was liable for the suit claim, which arose under Ex.A13 agreement; that while the plaintiff has proved the truth of Ex.A13 agreement by sufficient evidence and has also established the validity and enforceability of the same, the lower Court should have decreed the suit; that it is not correct to state that Ex.A13 agreement was opposed to public policy and was not enforceable in law; that Ex.A13 was a document in which the defendant has acknowledged his liability on a sum of Rs.90,000/- and admitted his liability to the welfare fund, and hence, no question of the agreement being opposed to public policy would arise; that it is pertinent to note that the defendant has not pleaded any illegality or unenforceability of Ex.A13 document relying upon S.23 of the Contract Act; that under such circumstances, the trial Court should not have raised such a question and answered in favour of the defendant without any basis whatsoever; that the finding of the lower Court that the said document was opposed to public policy was thoroughly unfounded and illegal; that the defendant has not established that the signature was obtained in Ex.A13 by undue influence or coercion; that the plaintiff has proved his case through the evidence of P.Ws.1 to 5 beyond any ioto of doubt, and in view of the same, the lower court should have decreed the suit; that the evidence adduced by the plaintiff would clearly disclose that the defendant submitted the accounts and executed Ex.A13 agreement voluntarily admitting his liability and asking time for payment; that D.Ws.2, 4 and 5 were interested witnesses, and they have joined hands with the defendant to deprive the plaintiff of his rightful claim; that the finding of the lower court that Exs.A1 to A10 were not in the handwriting of the defendant, though the same was established through the evidence of P.Ws.1 to 6, was wrong; that the trial court has placed much reliance on the minor discrepancies found in the evidence of plaintiff witnesses and has found that the said Ex.A13 is not a true and genuine document; that it is pertinent to note that when a suit notice was issued under Ex.A16, no reply was sent by the defendant; that the inconsistent explanation tendered by him for the non issuance of the reply would not only falsify his defence, but also would clearly reveal that the defendant knew that he had no defence; that Ex.A13 agreement was an affirmation of a pre-existing liability which was ascertained and quantified, and hence, it was enforceable in law, and under such circumstances, no need arises for the defendant to adduce any proof as to the discharge of the outstandings due to the other teachers; that it is pertinent to note that no one of them had made any complaint as to the non payment, and thus the defendant's liability was real as admitted by him under Ex.A13 and was enforceable, and hence the judgment of the trial court has got to be set aside, and the appeal has to be allowed and the suit be decreed.
11. In his sincere attempt to sustain the judgment of the trial Court, the learned Counsel appearing for the defendant would submit that the defendant was not in management of the fund; that there was no defalcation as alleged by the plaintiff; that the agreement as found under Ex.A13 was not executed by him; that the plaintiff obtained his signatures in blank papers by exercising force; that the said document is not valid and enforceable in law; that Ex.A13 has come into existence to stifle the criminal prosecution already launched by the plaintiff against the defendant; that in order to withdraw the said criminal proceedings, Ex.A13 agreement was entered into, and hence, the said document was opposed to public policy under S.23 of the Contract Act; that it is pertinent to note that Ex.A13 did not satisfy the requirements of a contract; that from the averments in the plaint, it is clear that the agreement was not supported by consideration at all; that the amounts were not misappropriated by the defendant, as alleged by the plaintiff; that the evidence adduced by the plaintiff does not show any misappropriation; that since the notice sent by the plaintiff contained false allegations, the defendant did not send any reply; that there is no proof that the plaintiff discharged the outstandings due to other teachers; that the trial court after consideration of the entire evidence, has come to the conclusion that the suit is premature and that the plaintiff was not entitled to the money decree; that the judgment of the trial Court does not require any interference, and the same has got to be sustained.
12. As seen above, the plaintiff has made the suit claim alleging that the parties were teachers in Thiagarajar Model Higher Secondary School, where a chit and welfare fund were run; that the defendant who was in management of the said fund till September 1980, handed over the same to the plaintiff on 1.10.1980; that on scrutiny of the accounts it was found that there was misappropriation by the defendant to an extent of Rs.90,000/-; that the accounts were verified by the other members and found to be so; that a demand was made on the defendant, but, in view of his hostile attitude, a complaint was lodged to the police, and under such circumstances, the defendant admitted his liability, agreed to pay the said sum and executed Ex.A13 agreement on 5.8.1982, and that the non performance of the defendant's obligation led the plaintiff to file the suit. The defendant who filed one written statement and two additional written statements raised different and inconsistent pleas by stating that he was never in management of the fund; that there was no defalcation; that he did not execute Ex.A13 agreement; that his signature was obtained in blank papers; that he was constrained to sign the same because of fear and shame and also in view of the police intimidation; and that the said document is not valid and enforceable in law.
13. Admittedly, the parties to the suit were teachers in the said School, and a chit and a welfare fund were run by the teaching staff of the said institution including the parties. From the available oral and documentary evidence adduced by both sides, it would be abundantly clear that the management of the said fund was with a particular teacher for a specified term, and accordingly, the plaintiff took over the management of the same on 1.10.1980. In the face of the available evidence and in particular the evidence of the defendant, it would be too late for the defendant to raise a defence that he was not in management till October 1980. It is quite evident that immediately on handing over of the books of accounts by the defendant pertaining to his period, the same was verified not only by the plaintiff, but also by the members and found that there was misappropriation made by the defendant, breaching the trust of the co-staff.
14. According to the plaintiff, the defendant handed over Exs.A1 to A10 statements of accounts pertaining to the period from 3.1.1980 to 1.12.1980, when the defendant was in managerial capacity. According to the said documents, a sum of Rs.82,500/found converted by the the defendant for his personal use. Though the defendant has denied his handwriting in the said documents and handing over of the same to the plaintiff, the same was subjected to comparison by P.W.6 handwriting expert, who has given Ex.P84 report, wherein she has opined that the writings and figures in those documents are similar to that of the admitted documents and made by the defendant. In view of the available evidence, the Court is of the considered view that there cannot be any difficulty in finding that the defendant has misappropriated the funds of the welfare fund to the extent of Rs.82,500/- as found under Exs.A1 to A10.
15. The claim of the appellant rested mainly on Ex.A13 agreement. Hence, the main question that would arise for consideration in the appeal would be whether Ex.A13 agreement is true, valid and enforceable. The consistent case of the appellant/plaintiff was that when he took up the management of the fund, the accounts were verified by himself and the other members; that the defalcations of the defendant was found; that the irresponsible answers and denial of liability by the defendant constrained him to lodge a police complaint, and when the same was pending, the defendant accepted the dues in the presence of all the teachers, and Ex.A13 agreement was entered into, wherein he agreed to pay Rs.90,000/- within a period of two years. Contrary to the above, the defendant questioned the very truth and genuineness of the document. In order to prove the execution of the document, the plaintiff has examined not only himself, but also three more teachers. They have clearly spoken about the circumstances, which preceded the execution, and the execution of the document. It is pertinent to note that the defendant has admitted his signature in Ex.A13 agreement. It remains to be stated that the defendant has raised all possible inconsistent pleas as to the manner in which Ex.A13 agreement came into existence. In view of the evidence adduced by the appellant/ plaintiff to prove the execution of the said document, the inconsistent stand taken by the defendant in different written statements, the admission of the signature in the document and the non-examination of any witness to show that the document came into existence as stated by the defendant, it has to be necessarily held that though the defendant has executed Ex.A13 document, he has come forward with a false plea that the said document was neither true nor executed as contended by the plaintiff. The Court below without proper appreciation of the available evidence has taken an erroneous view that the execution of the said document has not been properly proved. In view of the evidence on record, the Court has to necessarily hold that the defendant has executed the document voluntarily, and hence, he cannot be permitted to question the truth or genuineness of the document.
16. Inter alia, the respondent/defendant has challenged the validity of Ex.A13 agreement by averring that it has come into existence to stifle the prosecution which was already launched against the defendant by the plaintiff; that the same was pending; that the said agreement was entered into so as to discontinue the criminal proceedings, and hence, it was opposed to public policy under S.23 of the Contract Act. What was contended by the appellant before the court below and equally here also is that the said agreement was in affirmation of a preexisting liability as ascertained and quantified; that the said agreement was valid and enforceable; that the withdrawal of the criminal complaint was only incidental; that there was no stifling prosecution. It is an admitted position that a criminal complaint was filed by the appellant before the Judicial Magistrate's Court, Madurai, and only at that juncture Ex.A13 agreement has come into existence. A reading of Ex.A13 would clearly reveal the pendency of the criminal complaint and the undertaking by the appellant to withdraw the same. It is pertinent to note that not even a copy of the said complaint was placed in the hands of the Court to find out whether the defendant was accused of compoundable or non-compoundable offence. The circumstances in the instant case are indicative of the fact that had a complaint not been lodged, the defendant would not have executed such an agreement; and that had an agreement as found under Ex.A13, not been executed, it would not have resulted in the abatement of the criminal proceedings initiated by the plaintiff. The contention of the learned Senior Counsel for the appellant that no specific plea was raised in any one of the written statement to the effect that in any event, Ex. A13 was unenforceable as stifling prosecution, and consideration was illegal, cannot be countenanced.
17. Needless to say that the public policy is neither rigid nor static. It is true that at times it confronts the Civil Courts in interpreting the documents entered into between the parties. In a given case, if the Court is satisfied with the pleadings and the documents adduced that the terms contained in an agreement are so unconscionable and illegal, it should be declared as opposed to public policy. In order to find out whether a contract is opposed to public policy, as contemplated under S.23 of the Contract Act, or not, the Court has to necessarily look into whether the contract with consideration or the object which was forbidden by law or is of such a nature that, if permitted, it would defeat the provisions of any law or is fraudulent or implies injury to the person or the property of another is a contract, which was opposed to public policy. The mere fact that a question of law that the agreement in question was opposed to public policy was not raised either in the pleadings or before the trial Court cannot be taken as a proper guidance to shut out the litigant from pressing into service such a question which would tilt matters, and on appreciation of which, the real justice could effectively be rendered. It is true that in the instant case, there was no express pleadings in the written statement at the first instance. Since it is purely a question of law, the party can be allowed to raise the same at this stage. A careful scrutiny of the available evidence would lead to the irresistible and inescapable conclusion that Ex.A13 document does not satisfy the requirements of a contract, since the same is not supported by consideration. That apart, the Court has to necessarily refuse to enforce the said agreement as it is not only illegal since opposed to public policy, but also at the instance of the plaintiff, who has attempted to make illegal gain out of it.
18. Admittedly, the plaintiff, though he was in the managerial capacity of the said fund, has not filed the suit in the representative capacity, but has filed as an individual. It is not the case of the plaintiff that there was any transaction between them, and the defendant was personally liable to pay him on that count. It is borne by evidence that one could be in management for a particular term. If so, the plaintiff should have handed over the management to the successor in office, who should have continued the proceedings. Such a situation has not arisen in the instant case, since the said agreement was executed by the defendant in favour of the plaintiff personally and directly, and hence, the plaintiff in order to enforce the liability of the defendant under the agreement, filed the suit and continued the same also, according to the learned Counsel for the appellant.
19. Regarding the consideration, the averments in the plaint, the recitals in Ex.A13 document and the evidence adduced by the plaintiff' s side in that regard, would clearly reveal that the document was not supported by consideration at all. Nowhere the plaintiff has averred in the plaint that he has paid the members of the fund to the extent of Rs.90,000/-, and thus, the defendant was liable to pay. Ex.A13 reads:
"gpd;dhy; 1tJ egh; jw;nghJ bghWg;g[f;F te;jjpy; Mrphpah; blghrpl; bra;J itj;jpUe;j bjhifia jd; brhe;j bghWg;gpy; jpUg;gpf; bfhLj;J fzf;F ghh;j;jjpy; 2tJ egh; U:.90000/- (U:gha; bjhd;D}uhapuk; kl;Lk;) tiu jd; brhe;j cgnahfj;jpw;F vLj;Jf; bfhz;L jpUg;gp jUk;go nfl;ljpy;..................." The said recital reads as if the plaintiff has paid the members of the fund to the extent of Rs.90,000/- out of his pocket, and the same is falsified by the testimony of the witnesses examined on the side of the plaintiff. Thus, it would be clear that even without making payment to any of the subscribers of the chit, the plaintiff has obtained the said agreement as if he has already cleared the outstanding to the other members. The learned Senior Counsel for the appellant with vigour and vehemence would contend that the respondent/defendant cannot evade the liability under Ex.A13 agreement on the ground that there was no proof that the plaintiff discharged the outstanding dues to the other members. This contention cannot be countenanced at all. Quite evident it is that the recital in the agreement that the plaintiff has cleared the outstanding to the other members was false. It is true that the consideration can be either past or present or future. But, in the instant case, the consideration has been specifically shown as Rs.90,000/- representing not only the amount misappropriated by the defendant, but also the outstanding dues discharged by the plaintiff to the other members. The plaintiff has not adduced any evidence regarding the names of the persons, quantum paid to them, etc., or proof in that regard to show that he has discharged the outstanding dues of the members, which would alone enable him to recover the amount from the defendant. In the absence of the same, awarding a decree in favour of the plaintiff on the basis of Ex.A13 agreement would be nothing but allowing him to make unlawful gain under an illegal agreement. Hence, it has to be necessarily held that Ex.A13 document is neither valid nor enforceable in law, and thus, the plaintiff is not entitled to the relief asked for.
20. In the result, this appeal suit is dismissed, confirming the judgment of the lower court. Parties shall bear their own costs. Index: Yes
1. The Principal Subordinate Judge,
Madurai (with records).
2. The Record Keeper,
High Court, Madras.
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