2021 (12) TMI 522 - HC - Indian Laws

Suit for recovery of loan amount - Effect of the statements made under Order X Rule 1 and 2 CPC - effect of the TDS Certificates produced by the Defendant before the Trial Court - HELD THAT - This Court is of the opinion that a statement under Order X CPC when recorded, has to be read in the context of Order X Rule 1 CPC and Order X Rule 2 CPC. If there are any allegations of facts, which are either admitted or denied, there has to be an oral examination of the parties or any person, to elucidate the matter in controversy in the suit. - In the present case, the Chartered Accountant of the Defendant firm has stated in his statement that Section 194A of the Income Tax Act, 1961 relates to the payment of interest. This, in any event, is a provision of law, which can be clearly deciphered from a perusal of the said provision itself. The effect of a TDS Certificate being issued, and whether the same can be construed as an admission or not is a question that would arise in this case. The Statement of the Chartered Accountant of the Defendant firm, who stated that TDS was deducted, and deposited for the payment of interest also has to be considered. At the stage of final adjudication, the Trial Court shall bear in mind the statements made under Order X CPC read along with the pleadings of the parties. If the case of the Defendant, that the amount was advanced as a means of investment and not as a loan, is not made out, the Trial Court would proceed further, in accordance with law, on the basis of the evidence adduced by the Plaintiffs and the statements recorded under Order X CPC. Application disposed off.

Summary

Issues:
Challenge to order dismissing applications under Order XII Rule 6 CPC, nature of transactions as loan or investments, effect of statements under Order X Rule 1 and 2 CPC, interpretation of TDS Certificates as admissions.

Analysis:
The petitions challenged the Trial Court's order dismissing applications under Order XII Rule 6 CPC related to suits for recovery of loan amounts. Plaintiffs alleged loans while Defendant claimed investments. Defendant's application under Order VII Rule 11 CPC was dismissed, and statements of Defendant's proprietor and Chartered Accountant were recorded. Plaintiffs sought judgment on admissions under Order XII Rule 6 CPC based on these statements.

The Trial Court dismissed Plaintiffs' application, citing a Supreme Court judgment that statements under Order X Rule 1 and 2 CPC cannot secure admissions. The main issue was the effect of these statements and TDS Certificates produced by Defendant. Plaintiffs argued misinterpretation of the law, relying on a different judgment.

The High Court clarified that statements under Order X CPC must be read in context and used to elucidate facts in controversy. The Chartered Accountant's statement regarding TDS and interest payments was crucial. The Court emphasized the need to consider the effect of TDS Certificates and the nature of the transactions during final adjudication.

The Trial Court was directed to assess the evidence, including statements under Order X CPC and parties' pleadings, to determine if the transactions were loans or investments. If Defendant's investment claim is not substantiated, the Trial Court should proceed based on Plaintiffs' evidence and statements under Order X CPC. The petitions were disposed of with these instructions.