2019 (4) TMI 883 - HC - Indian Laws

Maintainability of suit - time limitation - nominee in the bank account or FDR - loan given by late Shri. Hari Om Rana to his father - Held that - The bank having confirmed that Mr. Rampal had withdrawn the amount as a nominee of late Shri. Hari Om Rana, he is liable to secure the said amount. Further, in so far as the explanations given by Mr. Rampal in his leave to defend application in paragraph H and I are concerned, all these issues as to why the monies were withdrawn from late Shri. Hari Om Rana s account and for what purpose they were put to use have to be thrashed out in trial. However, the FDR amount of ₹ 1,12,19,339/- deserves to be secured. Mr. Rampal has taken a stand that he has given a loan of ₹ 2 crores to late Shri. Hari Om Rana during his life time. This fact also needs to be established in trial as there are no documents placed by Defendant No. 1 to show in what manner the loans were extended by him to his son. The law under Order XXXVII suits is quite well settled. If there are issues which need to be gone into in trial, but the Plaintiffs have made out a case for being secured, leave to defend can be granted conditionally. There are various factual issues that need to be gone into and the present is not a case for a decree being passed at this stage especially because the matter is one amongst family members and there seems to be some basis for the Defendant No.1 to argue that the land in fact belongs to him - Admittedly, there is no loan agreement and there are no documents admitting liability. However, the encashment of the FDR and the payments made from the bank account of late Shri. Hari Om Rana to his father s bank account are circumstances that go against the Defendant No.1. It is the settled position in law that if the pleadings of the parties require to be adjudicated by the Court, the exceptional procedure under Order XXXVII CPC should not lead to decreeing of the suit. While there are triable issues which have been raised, the leave to defend cannot also be unconditional. The Plaintiff No. 1 is the widow of late Shri. Hari Om Rana and Plaintiff No. 2 is his daughter. Defendant No. 1 is in control of the entire estate and the estate may be whittled away by the time the suit is tried and adjudicated. Thus, some conditions have to be imposed. The IAs filed by the bank and Defendants No. 1, Mr. Rampal seeking leave to defend are accordingly allowed.

Issues Involved:
1. Maintainability of the suit under Order XXXVII CPC.
2. Allegations of fraud and misappropriation by Defendant No. 1.
3. Limitation period for filing the suit.
4. Entitlement to leave to defend by the Defendants.
5. Status of the nominee in relation to the FDR amount.
6. Requirement to secure the FDR amount encashed by Defendant No. 1.
7. Conditional leave to defend and imposition of security.

Detailed Analysis:

1. Maintainability of the Suit under Order XXXVII CPC:
The court found that the suit under Order XXXVII CPC is maintainable since all the monies were paid to Defendant No. 1 through banking channels, and the sum is a liquidated sum. The suit is not barred by limitation as the knowledge of the actual transactions was acquired by the Plaintiffs only in 2011.

2. Allegations of Fraud and Misappropriation by Defendant No. 1:
The Plaintiffs alleged that Defendant No. 1 committed fraud and misappropriated money belonging to late Shri. Hari Om Rana. Specific details of the amounts paid to Defendant No. 1 from the bank account of late Shri. Hari Om Rana were provided, totaling ?1,86,35,000/-. The court noted that these payments were made from the bank account of late Shri. Hari Om Rana, which was closed and reopened on the same day in another account.

3. Limitation Period for Filing the Suit:
Defendant No. 1 argued that the suit is barred by limitation as the alleged loan was given in 2007 and the suit was filed in 2014. However, the court held that the suit is not barred by limitation as the knowledge of the transactions was acquired by the Plaintiffs only in 2011.

4. Entitlement to Leave to Defend by the Defendants:
Defendant No. 1 sought unconditional leave to defend, stating there was no loan transaction between him and his son and that the suit is barred under Order II Rule 2 CPC and by limitation. The court held that the issues raised by Defendant No. 1 are triable and require a trial to determine the nature of the transactions.

5. Status of the Nominee in Relation to the FDR Amount:
The court referred to the judgment in CS(OS) 1073/2011, which clarified that a nominee does not become the owner of the amounts. The court held that the question of whether Defendant No. 1, as a nominee, could have taken the sums from the FDR needs to be examined in trial.

6. Requirement to Secure the FDR Amount Encashed by Defendant No. 1:
The court noted that Defendant No. 1 had encashed the FDR amounting to ?1,12,19,339/- after the death of late Shri. Hari Om Rana. Since the nominee does not become the owner of the amounts, Defendant No. 1 is liable to secure the said amount.

7. Conditional Leave to Defend and Imposition of Security:
The court granted conditional leave to defend to Defendant No. 1, subject to furnishing security for a sum of ?4 crores to the satisfaction of the Registrar General of the court within four weeks. Defendant No. 2 bank was granted unconditional leave to defend. The bank was also directed not to permit withdrawal of any amounts from the accounts of late Shri. Hari Om Rana without informing the Plaintiffs.

Conclusion:
The court allowed the applications for leave to defend filed by the Defendants with specific conditions imposed on Defendant No. 1 to secure the FDR amount. The suit was listed for further proceedings on 23rd July, 2019.

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