Final Order 3

Order Details: Copy of Judgment
Pdf Text: CS No.100095 / 2019 Moolchand – Haresh Judgment (Exh.36)
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MHCC010069902019 Suit Filed on : 08.07.2019
Evidence closed : 15.09.2023
Arguments closed : 22.03.2024
Decided on : 30.04.2024
Duration : 04 Y, 09 M, 23 Days
City Civil & Sessions Court, Mazgaon, Greater Mumbai
Court Room No. 31 – Commercial Court
(Additional District Judge : Vijay S. Hingne, LL. M.)
Commercial Suit No. 100095 / 2019 Exhibit No. 36
Plaintiffs 1 Moolchand Dalichand Jain
2 Vinod Moolchand Jain
3 Lalit Moolchand Jain
C / 9, Kakad Estate, R. G. Thadani Marg,
Worli, Mumbai.
4 Smt. Kalavati wife of Suresh Jain
3rd floor, Flat No. 10, Sardar Balvant Singh,
Dhondoba Marg, Mazgaon, Mumbai.
VERSUS
Defendant : Haresh Sankalchand Hirani
201, Hirani Villa, 45 Nehru Road,
Vile Parle (East), Mumbai 400 057.
Appearances
Plaintiffs
: Adv. Shri Rahul Chaubey
Adv. Shri Suresh Jain
Defendant
: Adv. Shri Sachin Mhatre
Adv. Shri Shrenik Gaikwad
Suit for Recovery of ₹. 7,00,000/-
************************************************************************
J U D G M E N T
(Delivered on this 30th Day of April, 2024)
Suit is preferred for recovery of .	₹ 7,00,000/- with
interest @ 12 % per annum.
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Case of Plaintiffs :
2) Sukhibai Moolchand Jain died on 24.12.2018
(hereinafter,
deceased Sukhibai).
Plaintiff No. 1 Moolchand Dalichand Jain, Plaintiff No.
2 Vinod Moolchand Jain, Plaintiff No. 3 Lalit Moolchand Jain
and Plaintiff No. 4 Smt. Kalavati Suresh Jain, are respectively
husband, sons and daughter / Legal Heirs of Sukhibai.
(hereinafter,
plaintiffs / P1 / P2 / P3 / P4).
3) Defendant Haresh Sankalchand Hirani is in business of
real estate (hereinafter,
defendant).
4) Defendant was in need of financial assistance for
purchase of property for his business purpose. Hence, through
P1-Moolchand, defendant approached Sukhibai. Defendant
requested Sukhibai to make investment or to extend financial
help. Defendant assured to repay amount with interest @ 12 %.
Because of acquaintance and representations, Sukhibai
made investment with defendant / advanced to defendant, sum of
₹.5,00,000/- through Account Payee Cheque No. 936584, Dt.
13.04.2012. Defendant executed receipt Dt. 16.04.2012.
5) Defendant regularly paid interest @ 12 % p. a. by
Cheque till 31.03.2016. From 01.04.2016, there was balance of
principal . 5,00,000/- with interest.	₹
On 01.04.2018, defendant executed Letter of
Confirmation of Account and admitted the liability.
6) Plaintiffs issued recovery-notice Dt. 26.06.2018.
However, defendant failed to repay. Hence, on 14.03.2019,
plaintiffs submitted dispute for Pre-Institution Mediation.
Defendant appeared and sought time, but thereafter failed to
appear. Hence, there was Non-Starter Report Dt. 29.06.2019.
According to plaintiffs, they are entitled for recovery of ₹.
7,00,000/- with future interest @ 12 % p. a. Hence, on
08.07.2019, they preferred Commercial Suit No. 100095 / 2019.
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Case of defendant (Written Statement, Exh.3, Dt. 19.12.2019) :
7) Defendant opposed Suit and prayed for its dismissal
with compensatory costs, on following grounds :
1. Plaintiffs have not filed Succession Certificate showing
themselves as Legal Heirs of Sukhibai.
2. On principal amount of . 5,00,000/-, defendant paid
₹
interest on monthly basis, till 31.03.2016. At that time,
defendant realized that, Sukhibai was carrying illegal
business of money lending, without holding valid
license. Hence, defendant stopped payment of interest.
3. Defendant unknowingly issued Confirmation Statement
from year to year.
4. Against Notice- Reply issued by defendant, plaintiffs
issued letter Dt. 15.11.2019, admitting that, they do not
have money lending license. Hence, Suit is hit by Sec.
10 of Money Lenders Act.
5. Defendant extracted data from website of District Court,
Maharashtra. It shows, plaintiffs have filed numerous
Commercial Suits against various persons. It proves,
plaintiffs are involved in illegal money lending
business.
6. Defendant is not under any liability to pay the amount.
7. Suit is not maintainable under Order 37 Rule 2 of Code
of Civil Procedure.
Evidence of Plaintiffs :
8) Plaintiffs adduced oral and documentary evidence as :
PW1, Exh.5 : Evidence of plaintiff Moolchand Dalichand Jain
Exh.8 : Death Certificate of Sukhiben Moolchand Jain.
Exh.9 : Accounts Dt. 01.04.2013 for 2012 to 2013.
Exh. 10 : Accounts Dt. 01.04.2014 for 2013 to 2014.
Exh.11 : Accounts Dt. 01.04.2015 for 2014 to 2015.
Exh.12 : Accounts Dt. 01.04.2017 for 2016 to 2017.
Exh.13 : Accounts Dt. 01.04.2018 for 2017 to 2018.
Exh.14 : Power of Attorney.
Exh.15 : Writing / Receipt.
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Exh.16 : Demand Notice Dt. 26.06.2018.
Exh.18 : Postal Receipts.
Exh. 20 : Evidence closure pursis Dt. 09.12.2021 by plaintiffs.
Exh.35 : Evidence closure pursis Dt. 01.07.2023 by plaintiffs.
Evidence of Defendant :
9) Defendant adduced oral and documentary evidence as :
DW1, Exh.25 : Evidence of defendant Haresh Hirani (through
Video Conferencing)
Exh.22 : Application by defendant, for taking his Disability
Certificate on record.
Order Dt. 04.08.2022, production is allowed.
Exh.27 : Letter issued by counsel of defendant with postal
receipt, acknowledgment card and letter Dt.
15.11.2019 of plaintiff.
Exh.28 : Copy of case status for the year 2019, extracted from
website of District Court, Mumbai.
Exh.30 : Evidence closure pursis Dt. 01.11.2022 by defendant.
10) Relevant dates of Court Business are as follows :
17.02.2020 Plaintiffs filed evidence-affidavit of Moolchand
Dalichand Jain (PW1, Exh.5)
24.02.2020 PW1 exhibited documents at Exh. 8 to Exh. 13.
20.01.2021
Defendant filed Notice of Motion No. 201 / 2021,
challenging maintainability of the Suit, on ground
of unauthorized money lending and limitation.
16.03.2021 Learned Predecessor rejected Notice of Motion.
30.03.2021 Plaintiff exhibited additional documents
Numerous dates, defendant failed to conduct cross-
examination of PW1 Moolchand.
09.12.2021 Plaintiff filed his evidence closure pursis Exh. 20
05.04.2022 Learned Predecessor, directed Suit to proceed
without cross-examination of PW1
29.07.2022 Defendant filed application (Exh. 22), for taking
his permanent disability certificate on record
04.08.2022 Said application was allowed
Permission was granted to defendant to examine
himself through video conferencing.
18.08.2022 Defendant examined himself through VC
01.11.2022 Defendant filed evidence closure pursis at Exh. 30.
10.03.2023 Defendant filed new Vakalatnama at Exh. 31.
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21.03.2023
Defendant filed Notice of Motion No. 101208 /
2023, seeking permission for cross-examination of
PW1
21.06.2023
Notice of Motion No. 101208 / 2023 was allowed
subject to cost of . 5,000/-.
₹
Both parties were directed to remain present on
01.07.2023, for cross-examination of PW1.
01.07.2023
PW1 Moolchand, aged 84 years, present for cross-
examination. However, defendant did not appeared
and also did not filed any application for
adjournment. Hence, Suit was directed to proceed
without cross-examination of PW1 Moolchand.
Plaintiff filed evidence closure pursis.
Suit was relegated to evidence of defendant.
Numerous dates, defendant failed to lead evidence.
15.09.2023 Evidence of defendant was closed by Court and
Suit was adjourned for arguments
29.02.2024 Plaintiff argued the Suit
Defendant was directed to argue or to file written
arguments, but he continuously remained absent.
22.03.2024 Arguments of defendant were closed and Suit was
adjourned for Judgment
Issues for determination :
11) My learned predecessor framed Issues at Exh. 4
(29.01.2020). My findings and reasons are as follows :
Issues
Findings
1. Whether the plaintiffs are legal
representative of deceased
Sukhibai Moolchand Jain?........... Redundant.
2 Whether the suit is maintainable
in view of Sec. 10 of the Bombay
Money Lenders Act 1946?........... Suit is maintainable.
3 Whether suit is barred by the law
of limitation?................................ In the Negative.
4 Whether plaintiffs entitled to
recover amount of . 7,00,000/-
₹
from defendant with interest @
12 % p. a. from date of suit till
payment or realization of
amount?........................................ In the Negative.
5 What order and decree?
As per final order.
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R E A S O N S
Reasons as to Issue No. 1 :
1. Whether plaintiffs are legal representative of deceased
Sukhibai Moolchand Jain?
12) Defendant has raised defense that, plaintiffs are not
legal heirs of Sukhibai.
Plaintiff examined Moolchand Dalichand Jain (PW1,
Exh.5). He claimed that, plaintiff No. 1 to No. 4 are legal heirs
and representatives of Sukhibai.
Thereby, claim of plaintiffs that, they are legal heirs of
Sukhibai, is unchallenged from the side of defendant.
13) However, it needs consideration that, this is
Commercial Suit, wherein dispute to be adjudicated is recovery
of amount. Dispute is not pertaining to rights over immovable
property.
Importantly, parties did not pleaded and did not adduced
evidence in manner that, this Commercial Court should give such
declaration regarding heir-ship. Therefore, having no bearing on
the Suit, the Issue is answered as
redundant.
Reasons as to Issue No. 2 :
2. Whether the suit is maintainable in view of Sec. 10 of
the Bombay Money Lenders Act 1946?
14) Plaintiffs claimed that, Sukhibai had provided financial
assistance to defendant. Defendant claimed that, Sukhibai is
unauthorized money lender.
In given facts and circumstances, it is not case of
defendant that,
1. Sukhibai or plaintiffs have provided financial assistance
to defendant on numerous occasions.
2. Sukhibai or plaintiffs have provided financial assistance
to numerous persons on numerous occasions.
In absence of such averments, it is not possible to come to
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conclusion that, Sukhibai / plaintiffs are unauthorized money
lenders. Hence, Suit is maintainable in its form. Therefore, the
Issue No. 2 is so answered.
Reasons as to Issue No. 3 :
3. Whether the suit filed by the plaintiffs is barred by the
law of limitation?.
15) Plaintiffs are claiming that, on
13.04.2012, Sukhibai had
provided financial assistance to defendant. Accordingly, on
18.04.2012, defendant executed Receipt (Exh.15) in favour of
Sukhibai.
Plaintiffs claimed that, said Receipt is on Letter-head of
defendant and it bears signature of defendant.
Defendant has not cross-examined PW1 on Receipt.
Defendant examined himself at Exh. 25. During said
examination, he did not claimed that, Receipt at Exh. 15 is not on
his Letter-head or that, it does not bear his signature.
Thereby, execution of Receipt at Exh. 15, becomes
admitted fact. Hence, it is relied upon.
Therefore, it is held that, through Exh. 15, plaintiffs
proved that, on 18.04.2012, Sukhibai provided financial help of
. 5,00,000/- to defendant.	₹
16) As Receipt is Dt.
18.04.2012, hence 3 years limitation
for plaintiffs, to file recovery Suit, will commence from
19.04.2012 and will conclude on
18.04.2015.
Suit is filed on
08.07.2019.
17) Plaintiffs claimed that, from time to time, defendant had
confirmed Account-Statement and thereby admitted the liability.
Plaintiffs filed said accounts at Exh. 9 (Dt. 01.04.2013)
to Exh. 13 (Dt. 01.04.2018).
Regarding these Accounts, defendant pleaded in
Written Statement (Exh. 3), Paragraph No. 12, as follows :
With reference to Para No. 5 of the Plaint thereof, I state
that I had unknowingly issued the Confirmation
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Statements from year to year recording the Original
Loan amount as well as the interest component on the
said loan amount.
Thereby, defendant admitted that, he had issued the Confirmation
Statements / Accounts of the plaintiffs.
18) Last Account Statement of plaintiffs is at Exh. 13 and it
is Dt.
01.04.2018.
It means, on 01.04.2018, defendant confirmed the
Account and thus admitted the liability. Thereby, it will have
effect of renewal of limitation.
Therefore, limitation to file recovery Suit will re-
commence from
02.04.2018 and will conclude on
01.04.2021.
Therefore, Suit filed on
08.07.2019 is within limitation.
Hence, Issue No. 3 is answered in the Negative.
Reasons as to Issue No. 4 :
4. Whether plaintiffs is entitled for of . 7,00,000/- from
₹
defendant with interest @ 12 % p. a. from the date of
suit till payment or realization of the amount?
19) Plaintiffs are claiming recovery of loan-amount.
Defendant is challenging maintainability of the Suit.
Hence, aspect relating to maintainability of Suit is taken
for deliberation.
What was the nature of amount advances : Loan / investment
20) Regarding nature of amount that was advanced,
plaintiffs pleaded in Plaint Para No.2 and No. 3, as :
2. The Plaintiffs state that defendant was in need of
financial assistance for purchase of property for his
business purpose and approached said deceased through
her husband Plaintiff No. 1 with a request to make
investment and / or to extend to defendant financial
help. The defendant further represented to said deceased
that defendant would repay the said amount of
investment / business loan on demand at any point of
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time together with interest at the rate of 12 % p. a.
thereon and defendant would not default in re-paying
the said dues.
3. The Plaintiff further state that since said deceased
knew defendant and believing representation and
assurances of defendant to be true, acceded to the
request of defendant and made investment with
Defendant and / or advanced to defendant a sum of Rs.
5,00,000/- Account Payee cheque bearing No. 936584
dated 13/04/2012 drawn on Punjab National Bank,
Worli, Mumbai, hoping that the moneys were safe and
secured and would be repaid by defendant on demand.
The Plaintiff state that defendant have also
acknowledged the receipt of said amount by executing
writing / receipt dated 18/04/2012 in favour of said
deceased. Hereto annexed and marked Exhibit ‘B’ is the
copy of writing / receipt dated 18/04/2012. The plaintiff
crave leave to refer to and rely upon the bank records
when produced.
- Emphasis supplied
21) Thereby, plaintiffs are simultaneously claiming that,
amount advanced was in the nature of,
1. Investment,
2. Financial help
3. Advance
In Commercial transactions, each word
Investment /
Financial help / Advance, have different meaning.
Commercial Suits warrants precise and specific
pleading. There cannot be multiple meaning pleading.
That apart, transaction is not between layman. It is
between two businessmen. So, it can be inferred that, plaintiffs
are aware of the precise difference of these terms.
So, either there can be
investment or
financial help or
advance. It cannot be
either or.
If it is
either or, then, plaintiffs needs to specifically
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plead said fact, giving proper explanation.
When plaintiffs are using symbol / in between the
words, as
Investment / Financial Help / Advance, it means,
plaintiffs themselves are not sure about nature of amount, that
was being handed over to defendant and hence, they are using the
symbol / in between those words.
Thereby, plaintiffs are coming with vague pleading and
are trying to blow hot and cold, at the same time. This aspect
cannot be overlooked. This shakes credibility of the plaintiffs.
For above reasons, it is held that, plaintiffs failed to
establish the
nature of amount, handed over to defendant.
Interest :
22) Plaintiffs claimed that, on the amount advanced, they
had levied interest @ 12 % p. a.
23) For proper appreciation, Receipt Dt. 18.04.2012 (Exh.
15), filed by the plaintiffs, is scanned here :
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24) Receipt simply mentions that, sum of . 5,00,000/- is	₹
received as loan by the defendant.
Receipt is absolutely silent about interest.
It will not happen that parties will agree about interest
and then execute document, but then will not mention the rate of
interest in the document.
It is also not case of plaintiffs that inadvertently, they
failed to mention the interest in the receipt.
It means, at the time of execution of the Receipt, the
parties had decided not to levy any interest. Hence, Receipt do
not have mention about
interest.
There is no other document on record, which will point
that, parties had agreed rate of interest @ 12 % p. a.
Further, when Court has to compare
oral evidence Vs
documentary evidence, then, documentary evidence i.e. Receipt
at Exh. 15, will prevail.
As the documentary evidence i.e. Receipt is silent about
interest, it is held that, plaintiffs were not entitled to levy interest
on the defendant.
Despite that, plaintiffs collected interest from defendant.
It means, plaintiffs illegally collected considerable
amount from defendant and assigned it to themselves, as interest.
25) Most importantly, plaintiffs nowhere pleaded in Plaint
or in evidence-affidavit, in exact words, as to how much amount
was collected by them as interest.
Though plaintiffs filed Statement of Account at Exh. 9
to Exh.13, however plaintiffs did not explained its entries in the
Court.
Commercial Suits warrants precise and specific
pleading. There cannot be just filing of account statements and
then asking the Court to go through it and understand its entries.
If there is
expert-document like account-statement, then its
relevant entries needs to be specifically pleaded and explained in
the Plaint and evidence-affidavit.
In short, plaintiffs
nowhere specifically pleaded and
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explained in the Plaint or deposed in the Evidence-affidavit as to,
against loan of . 5,00,000/-,
₹
how much amount was collected as
interest.
26) It is case of defendant that, he had re-paid entire amount
and once he realized that, plaintiffs are illegally collecting
interest, he stopped making the payment.
Receipt is Dt.
18.04.2012. As per case of plaintiffs, they
collected interest @ 12 % p.a. till
31.03.2016.
Thereby, plaintiffs collected interest @ 12 % p. a. on .	₹
5,00,000/- from
18.04.2012 to 31.03.2016 i.e. for almost four
years. However, plaintiffs did not disclosed any such amount
either in the Plaint or in the evidence-affidavit and they gave no
explanation for not disclosing said amount.
In absence of disclosure from plaintiffs, defense gains
importance that defendant had made entire payment and now
there is no amount due against defendant.
Most importantly, when plaintiffs were not entitled to
levy interest, then plaintiffs ought to have deducted such
collected interest amount from . 5,00,000/- and then ought to	₹
have claimed balance amount. However, after receiving
considerable amount as interest, that too for four years, plaintiffs
are still claiming that, . 5,00,000/- are balance. Thereby,	₹
plaintiffs are suppressing the facts, for which their case that, .	₹
5,00,000/- are balance, cannot be relied upon.
Maintainability of Suit as Commercial Suit :
27) Plaintiffs are claiming that, they provided money to
defendant and hence they (plaintiffs) are entitled for its recovery.
Defendant has challenged the maintainability of Suit.
Hence Suit is to be tested against Sec. 2 (1) (C) of the
Commercial Courts Act, 2015.
28) For Convenience, Sec. 2 (1) (C) of the Commercial
Courts Act, 2015, is re-produced as under :
(c) “commercial dispute” means dispute arising out of--
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(i) Ordinary transactions of merchants, bankers,
financiers and traders such as those relating to
mercantile documents, including enforcement and
interpretation of such documents;
(ii) Export or import of merchandise or services;
(iii) Issues relating to admiralty and maritime law;
(iv) Transactions relating to aircraft, aircraft engines,
aircraft equipment and helicopters…..
(v) Carriage of goods;
(vi) Construction and infrastructure contracts…..
(vii) Agreements relating to immovable property ….
(viii) Franchising agreements;
(ix) Distribution and licensing agreements;
(x) Management and consultancy agreements;
(xi) Joint venture agreements;
(xii) Shareholders agreements;
(xiii) Subscription and investment agreements pertaining
to the services industry including outsourcing
services and financial services;
(xiv) Mercantile agency and mercantile usage;
(xv) Partnership agreements;
(xvi) Technology development agreements;
(xvii) Intellectual property rights relating to registered and
unregistered trademarks, copyright, …..
(xviii) Agreements for sale of goods or provision of
services;
(xix) Exploitation of oil and gas reserves or other natural
resources …..
(xx) Insurance and re-insurance;
(xxi) Contracts of agency relating to any of the above; and
(xxii) Such other commercial disputes as may be notified
by the Central Government.
No transactions of merchants, bankers, financiers and traders :
29) As per Sec. 2 (1) (C) (i),
dispute and transaction will be
of
Commercial nature, if it is, ordinary transactions of
merchants,
bankers,
financiers and
traders.
30) In backdrop of pleading and aforesaid provisions,
following facts are ascertained :
1. Plaintiffs came up with case that, defendant was in need
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of financial assistance for purchase of property for his
business purpose. Hence, plaintiffs provided
.5,00,000/- to defendant.
₹
2. It is also not case of plaintiffs that, they had provided
financial help to defendant on numerous occasions.
3. It is not case of plaintiffs that, they are in business of
providing financial help to numerous persons like
defendant and that they are having license to that effect.
4. It means, this transaction is the only transaction between
plaintiffs and defendant.
So, fact remains that, transaction between plaintiffs and defendant
is an isolated act of loan transaction. Isolated transaction cannot
term the plaintiffs as,
merchants,
bankers,
financiers and
traders.
No mercantile documents :
31) As per Sec. 2 (1) (C) (i),
dispute and transaction will be
of
Commercial nature, if it is, relating to
mercantile documents.
32) Plaintiffs have annexed list of documents at Page No. 8
of the Plaint, which are as follows :
1. Correspondence prior to the Suit.
2. Receipt / Writing.
3. Letter of Confirmation of Accounts.
4. Other relevant papers and documents if any with the
permission of Hon’ble Court.
Plaintiffs did not filed documents like, Loan Agreement,
Promissory Note, Bill of Exchange or Loan Receipts, etc.
Documents filed by plaintiffs cannot be termed as
mercantile documents.
It means, there are
no mercantile document.
No Commercial Transaction :
33) Plaintiffs claimed that, said amount was utilized by
defendant for his business.
34) Plaintiffs pleaded that,
defendant was in need of
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financial assistance for purchase of property for his business
purpose.
That apart, plaintiffs did not disclosed as to what is the
business of defendant and what is nature of property, which
defendant intended to purchase through said amount.
Plaintiffs made general statement.
In absence of requisite pleading, contention that, alleged
loan was utilized for
commercial purpose, cannot be accepted.
Conclusion :
35) Plaintiffs pleaded that he provided
Investment /
Financial help / Advance to needy defendant.
However, plaintiffs failed to prove the nature of said
amount.
Plaintiffs also failed to prove that, plaintiffs are
financier or trader.
Plaintiffs failed to prove that, document i.e. Receipt is a
commercial document.
Plaintiffs failed to prove that, transaction is of
commercial nature.
So, for non-commercial transaction, plaintiffs have
preferred Commercial Suit. As alleged transaction is not covered
U / Sec. 2 (c) of the Commercial Courts Act, then, this being
Commercial Court, cannot try the Suit.
In that backdrop, defense raised by defendant regarding
maintainability of the Suit, succeeds.
36) Overall, Suit is suffering from following discrepancies :
1. Plaintiffs are using words as, Investment / Financial
help / Advance and is using symbol / in between those
words. Thereby, plaintiffs are making vague pleading
about the nature of amount handed over to defendant.
2. There is no document stating that payment made by the
defendant will be adjusted towards interest.
3. Plaintiffs have unauthorizedly collected interest from
defendant.
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4. Plaintiffs have not pleaded in exact words, the quantum
of amount collected as interest.
5. After collecting considerable amount from defendant,
plaintiffs are still claiming that, . 5,00,000/- are due.
₹
6. Suit is not maintainable as, Commercial Suit.
37) Plaintiffs have to stand on his own feet. For above
discrepancies, the isolated money transaction cannot be termed as
commercial transaction and plaintiffs cannot be made entitled for
alleged recovery. Hence, Issue No. 4 is answered in Negative.
ORDER
1. Commercial Suit No. 100095 / 2019, Moolchand Jain
Vs Haresh Hirani, is dismissed, with costs.
2. Decree be drawn up accordingly.
3. Judgment pronounced in Open Court.
4. Plaintiff be informed about his right to challenge this
Judgment and period of limitation, for the same.
5. After compliance and period of Appeal, Shirestedar and
AS to consign Record of the Suit, to Record Room.
Mumbai
Dated : 30.04.2024 (Vijay S. Hingne)
Additional District Judge,
Court Room No.31 – Commercial Court
City Civil & Sessions Court,
Mazgaon, Greater Mumbai
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