Anita Rani vs Ashok Kumar on 16 December, 2021

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Supreme Court of India
Anita Rani vs Ashok Kumar on 16 December, 2021Author: V. Ramasubramanian

Bench: Hemant Gupta, V. Ramasubramanian

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

Civil Appeal Nos. 7750­7751 of 2021
(Arising out of Special Leave Petition (C) Nos.12558­12559 of 2018)

ANITA RANI … Appellant (s)
Versus

ASHOK KUMAR & ORS. … Respondent(s)

JUDGMENT
V. Ramasubramanian, J.

1. Leave granted.

2. The two money suits filed by her having been dismissed by the

trial Court, but decreed by the First Appellate Court and the

decrees so passed by the First Appellate Court having been

reversed by the High Court in two second appeals, the plaintiff­
Signature Not Verified

appellant is back to square one and is before us in the above
Digitally signed by
Jayant Kumar Arora
Date: 2021.12.16
16:27:16 IST
Reason:

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appeals.

3. We have heard Shri Rajiv Bhalla, learned counsel for the

appellant and Shri Nidhesh Gupta, learned senior counsel for the

respondents.

4. The appellant herein filed two suits in Civil Suits No.15643

and 15592 of 2007 against the respondents herein, on the file of

the Court of the Civil Judge (Junior Division), Chandigarh, for

recovery of (i) a sum of Rs.10,48,000/­ in the first suit; and (ii) a

sum of Rs.67,31,000/­ in the second suit. The averments in the

first suit were as follows: (i) that the second respondent herein is

the sister of the appellant’s husband; (ii) that the first respondent

is the husband and the third respondent herein is the son of

respondent No.2; (iii) that the respondents herein (defendants in

the suit) were carrying on the business of dealing in building

materials under the name and style of Prem Chand Amar Chand;

(iv) that the appellant and her son are having a joint account in

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ICICI Bank, Sector­9, Chandigarh, where the respondents also

maintain an account; (v) that the respondents borrowed a sum of

Rs.10,50,000/­from the appellant on 18.11.2003, by way of a

cheque; (vi) that though the respondents refunded a sum of

Rs.5,00,000/­ on 7.08.2006, promising to repay the balance within

six months, they failed to honour the commitment; (vii) that,

therefore, the respondents were liable to pay a sum of

Rs.5,50,000/­towards principal and a sum of Rs.4,98,000/­

towards interest, thus, totaling to Rs.10,48,000/­.

5. The averments in the second suit in brief were as follows: (i)

that in the year 2001­2002, respondent No.1 lured the plaintiff and

her husband to join him in his real estate business: (ii) that since

the appellant and her family were residing in Kurukshetra and the

respondents were living in Chandigarh, the respondent No.1 got the

signature of the appellant in some blank papers, on the ground

that it was not possible to shuttle every time between these two

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places, whenever a transaction was to be completed; (iii) that the

appellant and her son were having account in the same branch of

the same bank in which respondent Nos.1 and 2 were also having

account; (iv) that with a view to make available necessary funds, for

the use of respondent No.1 in real estate dealings, the appellant

and her son kept substantial amounts to their credit in their bank

account; (v) that in March, 2006 the appellant and her husband

were shocked to find that substantial amounts totaling to

Rs.54,50,000/­ had been withdrawn from their account on different

dates by the respondents; (vi) that on her request, the bank officers

produced the records, which disclosed that a cheque dated

30.12.2005 for a sum of Rs.25,00,000/­, signed by respondent

No.3 by forging the signature of the plaintiff had been encashed,

apart from the withdrawal of a sum of Rs.9,50,000/­ on 9.05.2005

and the transfer of another sum of Rs.20,00,000/­ purportedly on

the written request of the appellant on 27.8.2005; (vii) that the

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withdrawals/ transfer of these amounts were not authorized by the

appellant, but had been done by misusing the signatures obtained

from the appellant; (viii) that after finding out these facts, the

appellant lodged a complaint in FIR No.195 on 14.12.2006 against

the respondents for the offences punishable under Sections 420,

467, 468 and 471 read with Section 120­B of the Indian Penal

Code; (ix) that the respondents were granted anticipatory bail in the

criminal case, upon their furnishing bank guarantee for a sum of

Rs.50,00,000/­ and (x) that the amounts withdrawn by/transferred

to the account of the defendants, together with interest @ 12% per

annum worked out to Rs.67,31,000/­ and (xi) that therefore they

were filing the suit for recovery of the said amount.

6. The case of the respondents in the first suit for recovery of

Rs.10,48,000/­ was: (i) that they never borrowed any money from

the appellant; (ii) that the amount received by them under the

cheque dated 18.11.2003 was for the purpose of investment in a

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property, which was part of the real estate business; (iii) that the

payment of Rs.5,00,000/­ made by them on 7.08.2006 was in full

and final settlement of the claim, after a compromise was arrived at

the intervention of three persons by name Satish Kumar, Prem Raj

Aggarwal and O.P. Gupta; and (iv) that since there was no

borrowing, the question of payment of interest does not arise and

that the suit was liable to be dismissed.

7. In their written statement of the second suit, it was contended

by the respondents: (i) that the appellant and the respondents

started doing real estate business jointly from the year 2001­2002;

(ii) that they purchased and sold many properties and shared the

profits; (iii) that the respondents never got the signatures of the

appellant in blank papers; (iv) that the amounts represented by the

cheques dated 9.05.2005, 27.08.2005 and 30.12.2005 were

towards the investment made by the appellant and her son in the

real estate business; (v) that the appellant issued confirmation

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letters to the bank, which showed that the payments under those

cheques were authorized payments; (vi) that the appellant’s son

actually gave an affidavit both on his behalf and on behalf of the

appellant; (vii) that in the said affidavit, it was admitted by the

appellant’s son that out of the amounts paid under the three

cheques, a sum of Rs.30,00,000/­ was given, out of love and

affection; (vii) that the appellant filed a false complaint, as though

the respondents cheated her and withdrawn money by forging the

signatures; (viii) that in view of the allegations against the bank,

the appellant ought to have impleaded the bank as a party to the

suit and (ix) that no money is due and payable by the respondents

to the appellant.

8. Before the trial Court, the appellant examined her husband as

PW­1 and examined herself as PW­2. The first respondent

examined himself as DW­1 and he examined as DWs 2 and 3, the

third party mediators, in the presence of whom a settlement was

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purportedly arrived at. The respondents marked a photocopy of the

letter addressed to the Manager of the bank bearing the signature

of the appellant as Exhibit D­1. They also filed the confirmation

letter dated 2.01.2006 as Exhibit D­2 and the affidavit purportedly

signed by the appellant’s son both on his behalf and on behalf of

the appellant, as Exhibit D­3.

9. By a judgment and decree dated 23.01.2013, the trial Court

dismissed the first suit on the ground that the appellant­plaintiff

failed to establish the advancement of the loan and that her failure

to examine her son, who was the joint account holder, as a witness

in the suit, was fatal. The trial Court also held the suit was not

within the period of limitation.

10. By a separate Judgment and decree dated 22.07.2013, the

trial Court dismissed the second suit on the ground that the parties

were in real estate business and that the payment of Rs.5,00,000/­

in full and final settlement on 7.08.2006, stood proved by the

version of third party mediators examined as DW­2 and DW­3. The

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Court also held that the appellant failed to establish fraud on the

part of the respondents.

11. The district Judge, Chandigarh by two separate Judgments

dated 18.03.2015, allowed the first appeals filed by the appellant in

Civil Appeal Nos.903 and 1056 of 2013 and granted a decree in the

first suit for recovery of Rs.5,50,000/­ together with interest @

7.5% per annum from the due date till the date of decree and

interest @ 6% per annum from the date of the decree till realization.

In the second suit, the trial court granted a decree for recovery of

Rs.54,50,000/­ together with interest @ 7.5 % per annum till the

date of the decree and @ 6% per annum from the date of the decree

till realisation.

12. The respondents filed two second appeals in RSA Nos.6134 of

2015 and 130 of 2016. Both the second appeals were allowed by

the High Court by a Judgment and decree dated 20.03.2018

resulting in the dismissal of the 2 money suits filed by the

appellant. Not stopping with the mere allowing of the appeals, the

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High Court went a step further by directing the appellant to refund

the amount of Rs.55,00,000/­ paid by the respondents, by virtue of

the order passed in the anticipatory bail application, together with

interest @ 7% per annum. It is against the said common judgment

that the plaintiff­appellant has come up with the above appeals.

13. The Contention of the Shri Rajiv Bhalla, learned counsel for

the appellant is that the trial Court as well as the High Court went

completely on a wrong track by accepting the plea of full and final

settlement set up by the respondents and that the High Court went

overboard in passing an order for refund of money paid in the

proceedings for grant of anticipatory bail.

14. Per contra, it is contended by Mr. Nidhesh Gupta, learned

senior counsel for the respondent that the failure of the appellant

to implead her son as a co­plaintiff or atleast to examine him as a

witness, coupled with her own admissions as PW­2, falsified her

case. Once it was found that the payments to the respondents were

authorized and once it was established through third party

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mediators that there was a settlement, the appellant­plaintiff was

bound to fail and that therefore, the judgment of the High Court

does not warrant any interference.

15. We have carefully considered the rival contentions and have

also gone through the pleadings, evidence and the Judgments of all

the three Courts.

16. As we have seen earlier, the first suit was for recovery of a sum

of Rs.5,50,000/­, which remained unrefunded, out of the amount

of Rs.10,50,000/­ allegedly paid by way of loan. The receipt of

Rs.10,50,000/­ by way of cheque No.459745 dated 18.11.2003 was

admitted by the respondents. Similarly the re­payment of

Rs.5,00,000/­ by the respondents to the plaintiff­appellant on

7.08.2006 is admitted by the appellant. The only defence set up by

the respondents was that the payment of Rs.5,00,000/­ made by

them on 7.08.2006 was by way of full and final settlement. To show

that there was a full and final settlement, the respondents

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examined two third party mediators. But no receipt was taken by

the respondents from the appellant that the payment of

Rs.5,00,000/­ on 7.08.2006 was in full and final settlement. There

was also no written memorandum of compromise/settlement.

When payment of a certain amount of money and the repayment of

only a portion of the same are admitted, the party pleading that

such a part repayment was in full and final settlement, has a huge

burden cast upon him to show that there was a settlement. Oral

evidence of the so called third party mediators, is not sufficient to

establish full and final settlement, in cases of this nature, where all

transactions have happened only through banking channels and

the defendants claimed that there were business transactions. It is

unbelievable that the respondents, who reached such a settlement,

failed to have the same recorded in black and white, either in the

form of a memo or in the form of a receipt.

17. Interestingly, Exhibit D­3 filed by the respondents is an

affidavit purportedly signed and verified by the appellant’s son on

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8.03.2006, both on his behalf and on behalf of his mother (the

appellant), agreeing to treat a sum of Rs.30,00,000/­ paid by the

appellant, as a payment made out of love and affection. If, on

8.03.2006, the appellant and her son were gracious enough to treat

a huge amount of Rs.30,00,000/­ as one made out of love and

affection, there could have been no occasion for a dispute requiring

mediation at the intervention of third parties, on 7.8.2006,

resulting in the payment of Rs.5,00,000/­ by the respondents to

the appellant in full and final settlement. Unfortunately, all the

three Courts failed to juxtapose these two events which happened

in an interval of five months, to see through the game.

18. In simple terms, the case of the appellant­plaintiff in the first

suit was one of lending and non­payment. The defence set up by

the respondents was one of payment of a lesser amount (than the

original amount), in full and final settlement. A party who admits

receipt of certain amount of money on a particular date and pleads

discharge by way of a full and final settlement at a latter date, is

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the one on whom the onus lies. This onus was not discharged by

the respondents in the first suit and, hence, the plaintiff was

entitled to succeed in the first suit. The High Court completely

overlooked this aspect.

19. Coming to the second suit, the case of the appellant­plaintiff

was that various amounts of money were either withdrawn from or

transferred out of their accounts, by the defendants unauthorisedly

and that the amounts so taken away totaled to Rs.54,50,000/­. The

defence of the respondents was that the amounts represented

authorized payments for the purchase and sale of properties in a

real estate business and that out of those amounts, a sum of

Rs.30,00,000/­ was treated as a payment made out of love and

affection.

20. Let us assume for a moment that the amount of

Rs.54,50,000/­ either withdrawn or transferred from out of the

account of the appellant by the respondents represented authorized

payments, made by the appellant towards investment in real estate

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business. In such a case, the respondents are obliged to produce

the accounts of the real estate business and show how those

amounts were accounted for. The respondents could not produce

any books of account. Therefore, the respondents thought it

convenient to claim that all those amounts were investments in a

real estate business and that a portion of it was agreed to be

treated as a gratuitous payment. Investments in business dealings

and gratuitous payments do not normally go together. As in the

first case, the flow of money from the account of the appellant­

plaintiff into the respondents’ account is admitted. While the

appellant­plaintiff termed such a flow of money as unauthorized

withdrawal /transfer, the respondents claimed the same to be part

of investment in real estate business. In the light of such a defence,

the onus, even in the second suit, was on the defence to show that

there were business dealings and that the amount stood completely

accounted for. No books of accounts were produced by the defence

to show that the amounts that flowed out of the plaintiff’s bank

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account were absorbed and accounted for within business.

21. Exhibit D­3 affidavit is a very curious document whose

admissibility itself is questionable. It starts with a solemn

affirmation reading “We Anita Rani,…. and Sulabh Singla… do

hereby solemnly affirm and declare as under”. But it is signed only

by Singla. According to this affidavit, sworn on 8.03.2006, the

appellant­plaintiff and her son had given Rs.30,00,000/­ to the

respondents out of love and affection. The affidavit goes further to

say that there was no transaction between the deponents and the

respondents. This affirmation allegedly made on 8.03.2006 that

there was no transaction between them, stands in contrast to the

claim of full and final settlement made on 7.08.2006.

22. In a suit for recovery of money, a defendant admitting the

receipt of money but pleading that the same was a gratuitous

payment, is obliged to prove that it was a gratuitous payment. As a

matter of fact Exhibit D­3 affidavit dated 8.03.2006 does not use

the expression “gratuitous payment”, but uses the expression “love

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and affection”. But this affidavit also states that there was no

transaction between the deponents and the respondents. Thus

while placing reliance upon this affidavit, the defendants actually

pleaded a mutually contradictory case, as reflected in paragraph 8

of the written statement which reads as follows:

“It is added that from the aforesaid amount, a sum of Rs.
30.00 lacs was given by the plaintiff to the defendants out of
love and affection being near relations and there was no
transaction between plaintiff and defendants to that effect.
Suit for recovery of the amount against the defendant by the
plaintiffs is not maintainable as the defendants are under no
legal obligation to pay back the amount to the plaintiff. The
defendants never borrowed the amount nor are under any
obligation to pay back the amount to the plaintiff. Copy of the
affidavit is attached herewith. Subsequently, the defendants
had settled their accounts pertaining to sale purchase of
properties jointly as well as other properties purchased in
order to run property dealer business and a sum of Rs. 5.00
lacs was paid to the plaintiff on 7.8.2006 in full and final
settlement of her claim through cheque dated 7.8.2006 and
the said cheque has been encashed by the plaintiff. The said
compromise was got arrived at by the intervention of Shri
Satish Kumar, S/o Shri Om Parkash, Prem Raj Aggarwal S/o
Shri Dev Raj Aggarwal and Shri O.P. Gupta S/o Shri Raghu
Nath Gupta. The plaintiff accepted the said cheque of a sum
of Rs. 5.00 lacs in adjustment/settlement of all the accounts
with regard to the amounts taken in satisfaction of her claim
fully and finally.

23. If as per the above pleadings and Ex. D­3, there was no

transaction, but a huge amount of Rs.30,00,000/­ was treated on

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8.03.2006 as a gratuitous payment, there was no occasion for the

settlement of any accounts on 7.08.2006 resulting in a full and

final settlement of the claim.

24. If the parties have had business dealings from the year 2001­

2002, it is hard to believe that a part of the amounts that flowed

out of the account of the plaintiff, was out of love and affection. The

only piece of evidence on the basis of which the gratuitous nature

of payment is sought to be proved is Exhibit D­3, but it does not

contain the signature of the appellant. Therefore, the plea of

gratuitous payment is unbelievable and was not established by the

respondents.

25. Once the plea of gratuitous payment falls to the ground,

Section 70 of the Indian Contract Act, 1872 will come into play.

Section 70 reads as follows:­

“70. Obligation of person enjoying benefit of non­
gratuitous act.­ Where a person lawfully does anything for
another person, or delivers anything to him, not intending to
do so gratuitously, and such other person enjoys the benefit
thereof, the latter is bound to make compensation to the

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 former in respect of, or to restore, the thing so done or
delivered.”

26. As held by this Court in the State of West Bengal vs. B.K.

Mondal & Sons1, Section 70 is based on the premise that

something was done by one party for another and that the work so

done voluntarily, was accepted by the other. Therefore, as a

corollary, the plea that there was a subsisting contract in the

nature of business transactions, is antithetic to the very essence of

section 70. This is why section 70 forms part of Chapter V of the

Indian Contract Act, which is titled as “Of certain relations

resembling those created by contract”.

27. As pointed out earlier, the respondents have admitted that the

moneys as claimed by the appellant­plaintiff were either paid by the

plaintiff or flown out of the plaintiff’s account into their own

account. Therefore, the onus was actually on the respondents to

prove either a discharge by way of settlement of accounts or the

gratuitous nature of the payment. The respondents miserably failed

1 AIR 1962 SC 779

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to discharge the onus of proof so cast upon them. Hence, the

plaintiff­appellant is entitled to a decree despite a few discrepancies

in her evidence, especially when the discrepancies have no bearing

upon the payment/flow of monies from the plaintiff to the

defendants.

28. In view of the above, the appeals are allowed. The Judgment

and decrees of the High Court are set aside and the Judgment and

decrees of the First Appellate Court are restored. In other words,

there will be a decree in both the suits, as per the Judgment of the

District Court, Chandigarh dated 18.03.2015 in Civil Appeal

Nos.903 and 1056 of 2013. The appellant will be entitled to costs in

these appeals which we quantify at Rs.50,000/­. The amount

deposited by the appellant pursuant to the Order passed by this

Court on 18.05.2018 and deposited in an interest bearing fixed

deposit pursuant to the Order passed by this Court on 14.12.2018

shall be released by the Registry to the appellant together with the

accrued interest.

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 …..…………………………..J.
(Hemant Gupta)

.…..………………………….J
(V. Ramasubramanian)
DECEMBER 16, 2021
NEW DELHI.

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