IN THE HIGH COURT OF KARNATAKA AT...

1

IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 22nd

DAY OF SEPTEMBER 2012

BEFORE:

THE HON’BLE MR. JUSTICE ANAND BYRAREDDY

REGULAR FIRST APPEAL No.1369 OF 2003

BETWEEN:

1. Sri. S.Rachaiah,

Major,

Son of Sri. Siddappa,

Since deceased by legal representatives,

1(a) Sri. Lingaraju,

Aged about 38 years,

1(b) Sri. Siddaraju,


1(c) Sri. Racha,

Correct name is Raja Shetty.R,


1(d) Smt. Lakshmi,


1(e) Smt. Saraswathi,


1(f) Smt. Jyothi,


2

All are sons and daughters

of Late Sri. Rachaiah,

2. Smt. Basamma,


All are residing at No.126,

Tippu Convent Road,

4th

Cross, Someshwaranagar,

I Block, Jayanagar,

Bangalore – 560 011. …APPELLANTS

(By Shri. C.S. Prasanna Kumar, Advocate for M/s. Kumar and

Kumar for Appellant)

AND:

Smt. N.Sarojamma,


Wife of N.Nagabhushanappa,

Presently residing at

No.15, 2nd

Cross,

3rd

Main, Aiyappa Temple Block,

Viveknagar,

Bangalore. …RESPONDENT

(By Smt. Anuradha Urs M.D., Advocate for Shri. C.V.Sudhindra,

Advocate)

*****

This Regular First Appeal is filed under Section 96 of the

Code of Civil Procedure, 1908, against the judgement and decree

dated 19.8.2003 passed in O.S.No.4321/1984 on the file of the

3

XXXI Additional City Civil Judge, Bangalore (CCH-14),

decreeing the suit for recovery of money.

This Regular First Appeal having been heard and reserved

on 06.09.2012 and coming on for Pronouncement of Judgment

this day, the Court delivered the following:-

J U D G M E N T

The appellants were the defendants before the trial court. The first

appellant having died, is represented by his legal representatives.

The respondent was the plaintiff.

2. It was the case of the plaintiff that she and the

defendants were neighbourers and that they were under financial

pressure in completing a building and had borrowed money from

the plaintiff as on 15.12.1981 in a sum of `15,000/-, which was to

be repaid with interest at the rate of 2% per month and the

defendants had jointly executed a Promissory Note in respect of

the same. Again on 7.4.1982, the defendants are said to have

borrowed a further sum of `25,000/-, which was to be repaid with

interest at the rate of 2.5% per month and had also executed a

4

Promissory Note in respect of the same. The plaintiff claimed that

the defendants had paid interest from time to time amounting in

all to `5,975/-. The plaintiff claimed that the defendants, when

called upon to repay the entire amount, had failed to do so and

were due in a sum of Rs.64,305/-, inclusive of interest, which the

plaintiff sought to recover and therefore, the suit was filed.

3. The defendants entered appearance and denied the plaint

averments. Insofar as the payments made by the defendants to the

plaintiff through cheques from time to time, were claimed as

payments made under a Chit Fund Scheme, to which defendant

no.1 was a subscriber. It was claimed that the plaintiff and her

aunt were running a Chit Fund Scheme, while also lending money

and defendant no.1 was a subscriber to two such Chit Fund

Schemes. In the course of those transactions, the plaintiff was in

the habit of securing signatures of the subscribers and defendant

no.1 may have affixed his signature to blank papers. Similarly,

defendant no.2 may have put her thumb impression to blank

5

papers at the instance of the plaintiff with respect to the said Chit

transactions. It was also alleged that the plaintiff was in the habit

of obtaining post-dated cheques while parting with cash and since

the defendants were illiterate, they did not suspect the bona fides

of the plaintiff.

It is further alleged that the plaintiff and her husband had

approached the defendants to take out Life Insurance Policies,

since the second defendant’s husband was an agent canvassing for

such policies and they also wanted to purchase the house being

constructed by the defendants and since the defendants had

declined to entertain the request of the plaintiff, the suit was filed

out of sheer greed and spite, misusing the documents which had

been obtained as aforesaid and sought for dismissal of the suit.

4. On the basis of the pleadings, the court below framed the

following issues:-

6

“1. Does plaintiff prove that defendant took loan of

`15,000/- on 15.12.1981 by executing promissory note promising

to repay with interest @ 2% P.M.?

2. Does plaintiff further prove that defendant took further

amount of `25,000/- as loan on 7.4.1982 by executing D.P.Note

agreeing to repaying with interest @ 2½% per month?

3. Does plaintiff further prove the payment of interest by

defendant as averred in para 4 of the plaint?

4. Whether the plaintiff is entitled for the amount claimed

with interest?

5. Whether plaintiff is a money lender carrying on business

without licence? If so whether suit is not maintainable?

6. Whether defendants are debtors and suit claim is

discharged? ”

The court below answered issues 1 to 3 in the affirmative

and awarded future interest at the rate of 6% per annum while

answering issue no.4 and held issues 5 and 6 in the negative and

7

decreed the suit. It is that which is under challenge in the present

appeal.

5. It is firstly contended by the learned Counsel for the

appellants-defendants that the very suit was not maintainable. It is

pointed out from the record that the suit was filed in the year

1984. The plaintiff did not choose to prosecute the suit with any

diligence. Therefore, it was dismissed in the year 1997. Though

it was restored later, the suit was again dismissed on 25.7.2002, as

the respondent and her counsel had remained absent. Though an

application was filed on the very day, to set aside the dismissal of

the suit, that application is said to have been dismissed on

26.7.2002. Aggrieved by the dismissal, the plaintiff had filed a

Civil Revision Petition in CRP 3229/2002 before this Court. At

the stage of admission, the plaintiff chose to withdraw the petition

and it was accordingly dismissed. The plaintiff thereafter having

filed a petition to restore the suit before the trial court in Misc.No.

682/2002, that petition is said to have been allowed, without

8

notice to the defendants by order dated 8.10.2002 and it is

thereafter that the suit has been decreed in favour of the plaintiff

as on 19.8.2003.

The learned Counsel for the appellants would therefore

contend that when the suit was dismissed in the first instance and

the miscellaneous application to restore the suit also having been

rejected and when a revision petition was filed challenging the

same and the same has been dismissed by this court, the dismissal

of the suit attains finality. The court below having entertained a

second Miscellaneous Petition, is inexplicable. Therefore, the

entire proceedings are vitiated as the revival of the suit by the trial

court was impermissible in law and is rendered void. An

application in this regard in Interlocutory Application No.22 has

also been rejected on the ground that on a second Miscellaneous

Application, the defendants had not chosen to challenge the same

by seeking framing of an issue as to whether the suit itself was

maintainable, since it could not have been restored on a second

Miscellaneous Application. and therefore, the trial court felt it

9

unnecessary to frame any additional issues on events that have

followed subsequent to the completion of pleadings and that the

validity or otherwise of the order could not be reviewed by the

trial court itself. This, the learned Counsel would submit, is

opposed to the admitted sequence of events that when a revision

petition was preferred before this court and was unconditionally

withdrawn without reserving liberty to approach the trial court

with a Second Miscellaneous Petition and therefore, the legality of

such restoration of the suit by the trial court, would be a primary

ground on which the present appeal is filed and would submit

that the appeal would have to be allowed on that ground alone. In

this regard, he would rely on the following authorities:

1. Amba Bai and others vs. Gopal and others, AIR 2001 SC

2003,

2.Kunhayammed and others vs. State of Kerala and

another, JT 2000(9) SC 110,

3.Abbai Maligai Partnership Firm and another, vs.

K.Santhakumaran and others, AIR 1999 SC 1486.

10

It is further contended that even on merits, the defendants

had denied the execution of the documents, on the basis of which,

the suit had been filed and therefore, the burden was on the

plaintiff, to establish the execution of the said documents. A

presumption under Section 118 of the Negotiable Instruments Act,

1881 (Hereinafter referred to as the ‘NI Act’, for brevity) would

come into play only if the execution of the documents in question

is admitted. Therefore, in the face of a handwriting expert having

expressed an opinion, that the disputed signatures and the

admitted signatures of defendant no.1, though were identical, the

thumb impression of defendant no.2 has not been confirmed as

that of defendant no.2 and therefore, when the plaintiff does not

seek to rely upon the said report, it cannot be said with any

certainty that the execution of the documents in question, have

been established. The learned counsel would submit that the court

below having proceeded to hold that since the defendants had

admitted the execution of blank documents, the same could have

been presumed as being suit documents is unfair and therefore, the

11

learned counsel would seek to contend that the plaintiff had failed

to discharge her burden to establish that the documents were

executed by the defendants.

6. The learned counsel for the respondent-plaintiff, on the

other hand, would contend that insofar as the contention that the

dismissal of the suit had attained finality is not correct. Though

the initial dismissal of the suit and dismissal of an application to

restore the same, having been challenged in revision before this

court and at the stage of admission, it was pointed out that the

circumstance, under which the suit was dismissed, was in the

following background:

The suit had been posted on 21.2.2002 and since it was

declared a general holiday, the case had been called on 22.2.2002,

on which date, process was ordered to be taken and notice was

ordered to be issued if such process was taken and the matter

stood adjourned to 25.7.2002. On 25.7.2002, the case had been

called out and the suit was dismissed without granting the prayer

12

of the plaintiff to furnish process for issuance of notice to the legal

representatives of Defendant No.1. The order of dismissal was

made even against defendant no.2, who was on record and was

contesting the proceedings. Therefore, even if the suit could have

been dismissed as against defendant no.1, it could not have been

dismissed as against defendant no.2, who continued to be on

record. The application made on the very day seeking to recall the

order was summarily rejected. This was noticed by this court at

the stage of admission and it was observed that the remedy of the

plaintiff was to be found in Order IX Rule 4 of the Code of Civil

Procedure, 1908 and not by way of a revision petition. It is in that

background that the revision petition was withdrawn and a

Miscellaneous Petition was filed in Misc.NO.682/2002, which

came to be allowed by an order dated 8.10.2002 and therefore,

there is no illegality or irregularity in the suit having been

restored, for it was found that the court below could not have

dismissed the suit even as against defendant no.2, if there was

default in furnishing process in respect of defendant no.1 and

13

would submit that the Doctrine of Merger sought to be pleaded by

the learned Counsel for the defendants would not be applicable, if

the appellate or revisional jurisdiction of a higher court is not

exercised on the merits of the matter and therefore, the dismissal

of the suit by the trial court, sought to be contended to have

merged with the order of this court, dismissing the revision

petition as withdrawn, is not tenable and seeks to place reliance on

the following authority:

Gangadhara Palo vs. Revenue Divisional Officer and

another, (2011) 4 SCC 602

Insofar as the other contention that the execution of the suit

documents having been denied, it is contended that the burden

was on the plaintiff to establish the same. Except the self-serving

denial by the defendants, no doubt has been created insofar as the

said documents are concerned and the admitted statement that the

several blank papers had been signed or that the thumb

impressions of the second defendant affixed and handed over to

the plaintiff, would belie the claim that the defendants have not

14

signed or affixed their thumb impressions on any document. Such

a plea is taken only to overcome the execution of the documents in

question. The categorical evidence of the handwriting expert that

the signatures of the first defendant had been compared with the

specimen signature or the admitted signature and were found to be

by one and the same person is adequate proof to independently

establish the execution of the document. Since the said expert

had expressed some doubt about the thumb impression of the

second defendant, the said report not being pressed into service,

cannot be a circumstance which can be cited in favour of the

defendants. The court below having independently scrutinized the

documents has accepted the genuineness thereof and therefore, it

cannot be said that the execution of the documents has not been

proved and hence Section 118 of the NI Act would come into play

and passing of consideration under the documents is a

presumption in favour of the plaintiff. Therefore, there is no

substance in the grounds raised in the appeal and the Counsel

would seek dismissal of the appeal.

15

7. In the light of the above rival contentions, the first point

that requires to be considered would be whether the order of

dismissal of the suit stood merged with the order passed by this

court in revision and therefore had attained finality, and on a

second application seeking restoration of the suit whether was

maintainable, and whether the suit could have been revived.

The contention that the order of dismissal of the suit stood

merged with the order passed by this court in revision is not a

valid contention.

Insofar as the decision relied upon by the learned Counsel

for the appellants in Abbai Maligai supra, is concerned, the said

decision may not apply to the facts of the case on hand, since the

apex court was dealing with a situation where a Single Judge of a

High Court had exercised review jurisdiction in certain matters,

which had originally been carried by way of a Special Leave

Petition to the apex court and had been dismissed by the apex

court. The learned Single Judge , who was aware of such

16

dismissal, had exercised review jurisdiction in respect of the very

matters and therefore, while expressing disapproval of such

action on the part of the High Court, the order being set aside,

would be out of context.

In Kunhayammed and others, supra, the apex court has set

out its judicial opinion on the development of Doctrine of

Merger and the principles that have been established in relation to

the same and summed up its conclusions as under:

“ (i) Where an appeal or revision is provided against

an order passed by a court, tribunal or any other

authority before superior forum and such superior forum

modifies, reverses or affirms the decision put in issue

before it, the decision by the subordinate forum merges

in the decision by the superior forum and it is the latter

which subsists, remains operative and is capable of

enforcement in the eye of law.

ii) The jurisdiction conferred by Article 136 of the

Constitution is divisible into two stages. First stage is

upto the disposal of prayer for special leave to file an

appeal. The second stage commences if and when the

leave to appeal is granted and special leave petition is

converted into an appeal.

17

(iii) Doctrine of merger is not a doctrine of universal

or unlimite application. It will depend on the nature of

jurisdiction exercised by the superior forum and the

content or subject-matter of challenge laid or capable of

being laid shall be determinative of the applicability of

merger. The superior jurisdiction should be capable of

reversing, modifying or affirming the order put in issue

before it. Under Article 136 of the Constitution the

Supreme Court may reverse, modify or affirm the

judgment-decree or order appealed against while

exercising its appellate jurisdiction and not while

exercising the discretionary jurisdiction disposing of

petition for special leave to appeal. The doctrine of

merger can therefore be applied to the former and not to

the latter.

iv) An order refusing special leave to appeal may be

a non- speaking order or a speaking one. In either case

it does not attract the doctrine of merger. An order

refusing special leave to appeal does not stand

substituted in place of the order under challenge. All

that it means is that the Court was not inclined to

exercise its discretion so as to allow the appeal being

filed.

v) If the order refusing leave to appeal is a speaking

order, i.e. gives reasons for refusing the grant of leave,

then the order has two implications. Firstly, the

18

statement of law contained in the order is a declaration

of law by the Supreme Court within the meaning of

Article 141 of the Constitution. Secondly, other than the

declaration of law, whatever is stated in the order are

the findings recorded by the Supreme Court which

would bind the parties thereto and also the court,

tribunal or authority in any proceedings subsequent

thereto by way of judicial discipline, the Supreme Court

being the apex court of the country. But, this does not

amount to saying that the order of the court, tribunal or

authority below has stood merged in the order of the

Supreme Court rejecting special leave petition or that

the order of the Supreme Court is the only order binding

as res judicata in subsequent proceedings between the

parties.

(vi) Once leave to appeal has been granted and

appellate jurisdiction of Supreme Court has been

invoked the order passed in appeal would attract the

doctrine of merger; the order may be of reversal,

modification or merely affirmation.

(vii) On an appeal having been preferred or a

petition seeking leave to appeal having been converted

into an appeal before Supreme Court the jurisdiction of

High Court to entertain a revew petition is lost

thereafter as provided by sub-rule (1) of Rule (1) of

Order 47 of the C.P.C.”

19

And the following passage from Amba Bai’s case, is sought

to be relied upon by the learned Counsel for the appellants:

“If the Judgement or order of an inferior Court

is subjected to an appeal or revision by the superior

court and in such proceedings the order or judgment is

passed by the superior court determining the rights of

parties, it would supersede the order or judgment

passed by the inferior court. The juristic justification

for such doctrine of merger is based on the common

law principle that there cannot be, at one and the same

time, more than one operative order governing the

subject matter and the judgment of the inferior court is

deemed to lose its identity and merges with the

judgment of the superior court. In the course of time,

this concept which was originally restricted to

appellate decrees on the ground that an appeal is

continuation of the suit, came to be gradually extended

to other proceedings like Revisions and even the

proceedings before quasi- judicial and executive

authorities.”

20

While in the case relied upon by the respondent in

Gangadhara Palo, supra, the Supreme Court has elaborated the

legal position thus:

“6. When this Court dismisses a special leave

petition by giving some reasons, however meager (it

can be even of just one sentence), there will be a

merger of the judgment of the High Court into the

order of the Supreme Court dismissing the special

leave petition. According to the doctrine of merger,

the judgment of the lower court merges into the

judgment of the higher court. Hence, if some reasons,

however meager, are given by this court while

dismissing the special leave petition, then by the

doctrine of merger, the judgment of the High Court

merges into the judgment of this Court and after

merger, there is no judgment of the High Court.

Hence, obviously, there can be no review of a

judgment which does not even exist.

7. The situation is totally different where a special

leave petition is dismissed without giving any reasons

whatsoever. It is well settled that special leave under

Article 136 of the Constitution of India is a

discretionary remedy, and hence a special leave

petition can be dismissed for a variety of reasons and

not necessarily on merits. We cannot say what was in

the mind of the Court while dismissing the special

21

leave petition without giving any reasons. Hence,

when a special leave petition is dismissed without

giving any reasons, there is no merger of the judgment

of the High Court with the order of this Court. Hence,

the judgment of the High Court can be reviewed since

it continues to exist, though the scope of the review

petition is limited to errors apparent on the face of the

record. If, on the other hand, a special leave petition

is dismissed with reasons, however meager (it can be

even of just one sentence), there is a merger of the

judgment of the High Court in the order of the

Supreme Court. (See: the decisions of this Court in

Kunhayammed and others vs. State of Kerala and

another,(2000)6 SCC 359, S. Shanmugavel Nadar vs.

State of T.N., (2002)8 SCC 361, State of Manipur vs.

Thingujam Brojen Meetei, (1996)9 SCC 29, and

U.P.SRTC vs. Omaditya Verma, (2005)5 SCC 424.)”

The case-law that is sought to be referred to hereinabove

would hardly assist the appellants. It cannot be said that the

dismissal of the suit merged with the order of this court dismissing

the revision petition as withdrawn and as already pointed out, the

dismissal of the suit itself was irregular, as the trial court had

failed to notice that the suit could not have been dismissed for

22

default or for non-furnishing of process in respect of one of the

defendants, when the other defendant was very much on record

and therefore, had been summarily restored, even without issuing

notice to the respondent.

Insofar as the contention that the execution of the

documents has not been proved is concerned, the mere denial of

the execution, though would cast the burden on the plaintiff, the

admission by the defendants that there were transactions between

the plaintiff and themselves and there was occasion to execute the

documents in favour of the plaintiff, was apparently a caveat to

overcome the documents, to which they had affixed their signature

and thumb impression respectively. Therefore, it was at best a

self-serving denial. The trial court has adequately scrutinized the

documents in arriving at the conclusion that the execution of the

documents was proved. Hence, there is no substance in the

contention raised in that regard. In this view of the matter,

the consideration under the suit documents having passed is a

23

presumption that would arise in favour of the plaintiff under

Section 118 of the NI Act.

Hence, there is no merit in this appeal and the same stands

dismissed.

It is brought to the attention of the Court that the appellants

had, in the first instance, deposited a sum of Rs.34,500/-, which

the respondent is entitled to withdraw in partial satisfaction of the

decree. Accordingly, the respondent is permitted the withdraw the

same.

Sd/-

JUDGE

nv

IN THE HIGH COURT OF KARNATAKA AT...

Documents

Transcript of IN THE HIGH COURT OF KARNATAKA AT...