Civil Suit: Suit for Recovery of Money – In the instant case, appellant filed two suits against respondents for recovery of money – Appellant and respondents are relatives – In the first suit, respondents borrowed a sum of Rs.10,50,000/- from the appellant by way of a cheque, out of which Rs.5,00,000/- was refunded by respondents and promised to repay the balance within six months but failed to refund – In the second suit, appellant and her husband joined respondent in his real estate business in which various amounts were either withdrawn from or transferred out of appellant’s accounts by the respondent unauthorisedly amounting to Rs.54,50,000/- – Trial Court dismissed both the suits – First appellate court allowed the appeals – Respondents filed appeals before High Court which were allowed resulting in dismissal of the two money suits – On appeal, held: In the first suit, the defence set up by the respondents was that the payment of Rs.5,00,000/- made by them was by way of full and final settlement – However, no receipt and written memorandum of compromise/settlement were taken by respondents from the appellant – When a party pleads part repayment in full and final settlement of certain some of money, the onus is upon him to show that there was a settlement – This onus was not discharged by the respondent – Hence, the appellant entitled to succeed in the first suit – In the second suit, 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 – The onus was on defence to show that there were business dealings, however, no books of accounts were produced by the defence to show that the amounts flowed out for business dealings – If the appellants had treated Rs. 30,00,000/ as one made out of love and affection, there could have been no occasion for dispute requiring mediation, resulting in the payment of Rs.5,00,000/- by respondents to appellant in full and final settlement in an interval of five months – The only piece of evidence on the basis of which the gratuitous nature of payment is sought to be proved is an affidavit sworn by appellant, but it did not contain the signature of the appellant – Hence, plea of gratuitous payment was not established by the respondents – Suit decree.
Allowing the appeals, the Court
HELD: 1. 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 dated 18.11.2003 was admitted by the respondents. Similarly the repayment of Rs.5,00,000/ by the respondents to the plaintiff appellant 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 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. 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. [Paras 16,18][971-CG; 972-D]
2. Coming to the second suit, the case of the appellant 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. 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 into the respondents’ account is admitted. While the appellant 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 account were absorbed and accounted for within business. [Paras 19, 20][972-D-H; 973-A-B]
3. In regard to the defence of gratuitous nature of payment, 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. Hence, the Judgment and decrees of the High Court are set aside and the Judgment and decrees of the First Appellate Court are restored. [Paras 24, 28][974-E; 975-D] State of West Bengal v. B.K. Mondal & Sons AIR 1962 SC 779 : [1962] 1 Suppl. SCR 876 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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