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TMI Blog2023 (7) TMI 709X X X X Extracts X X X X X X X X Extracts X X X X ..... xecution of the promissory notes. Once, the plaintiff proves execution of promissory notes in his favour by preponderance of probabilities, he is entitled to press into service the statutory presumption under Section 118 of Negotiable Instruments Act. The place of execution and value of the promissory notes in words as well as in figures are written in different ink. However, merely because the name of the creditor and date of the instruments are filled up with a different ink, we cannot come to a definite conclusion that there is a material alteration in the suit promissory note vitiating is validity. First of all, the defendants have not made any specific plea with regard to the material alteration in his pleadings. Therefore, it is not open to them to make submission regarding material alteration without a plea. Further under Section 20 of Negotiable Instruments Act, a person who signs an inchoate document gives prima facie authority to the holder of the instruments to complete the same and make it as a complete Negotiable Instrument. Therefore, merely, because a different ink is used in respect of the name of the creditor and date of the instruments, we cannot come to a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness and promised to repay the said loan amount within 30 days. The defendants also agreed to hand over the property documents registered as Document No.13186/2013 at Thiruporur Sub Registrar Office, which stands in the name of 3rd defendant as a collateral security for the proper repayment of the said amount. The defendants insisted that the plaintiff should pay the loan amount in cash. Accordingly, the plaintiff paid a sum of Rs. 2,49,00,000/- (Rupees Two Crores and Forty Nine Lakhs Only) to the defendants on 19.06.2015. Totally, nine promissory notes were executed by the defendants for a total value of Rs. 2,49,00,000/- (Rupees Two Crores and Forty Nine Lakhs Only). The second defendant alone executed five promissory notes, totally for a value of Rs. 1,49,00,000/-. The second and third defendants jointly executed four promissory notes, totally for a value of Rs. 1,00,00,000/-. The defendants agreed to pay interest at the rate of 2% per month for the amount received by them. The plaintiff arranged the above said money through his friends and relatives. As per the promise made by the defendants, they should have repaid the amount on or before 19.07.2015. As they failed to repay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al property documents to the defendants. It was further contended that Mr.Naresh Sancheti who brokered the deal with Adeshwar Investments colluded with the plaintiff to file the present suit by concocting facts. It was further contended that the first defendant had borrowed Rs. 1,00,00,000/- from Sushil Kumar and group, which was disbursed to the first respondent on 20.03.2015. The said amount was repaid within a period of six months. The repayments made on various dates were mentioned in the written statements. It was also contended at the time of execution of loan documents to Sushil Kumar and group, the defendants had given number of cheques and promissory notes to Naresh Sancheti who brokered with the deal. It was also contended that under the pretext of arranging further loan amount, Naresh Sancheti obtained various cheques and pronotes from the defendants. However, neither did he arrange for the loan amount nor returned the cheques and pronotes. It was also contended that the defendant issued a reply notice dated 31.08.2015 to the pre-suit notice dated 10.08.2015 and the same was delivered to the plaintiff on 01.09.2015. 3.3. In nutshell, it is the contention of the defend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n mainly on the ground that the defendants failed to furnish any contemporaneous admitted signatures. However, the defendants had not taken further steps to send the suit promissory notes for Forensic examination. The learned counsel by taking this Court to the income tax returns of the plaintiff for the assessment years 2014-2015, 2015-2016, 2016-2017 and 2017-2018 which were marked as Exs.P23, P24, P14 and P15 respectively submitted that the payment made to the first defendant was reflected in plaintiff's income tax returns. Arguments of the learned counsel for the defendant: 7. The learned counsel for the defendants submitted that the payment of Rs. 2,49,00,000/- by the plaintiff in cash is impermissible as there is a bar under Section 269 SS of Income Tax Act for transactions over and above a sum of Rs. 50,000/-. The learned counsel further submitted that the bar is also applicable to Non-Banking Financial Companies (NBFC) by virtue of circular issued by RBI on 09.03.2017 vide RBI/2016-17/245 DNBR (PD) CC.No.086/03.10.001/2016-17. The learned counsel submitted that according to the plaintiff, the alleged loan amount was paid to the defendants in one month in one i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow of Rs. 1,47,34,877/- by way of realization of loan amount for the relevant period. Therefore, it is the submission of the learned counsel during the financial year 2015-2016, relevant to the assessment year 2016-2017, the plaintiff received total cash inflow of Rs. 2,56,64,877/- which was sufficient to fund the suit transaction. The learned counsel further submitted that Section 269 SS of Income Tax Act only prohibits the person who receives a loan from accepting cash payment above the specified sum. Therefore, the prohibition under Section 269 SS will not get attracted to the plaintiff who disburse payment to others. 9. The learned counsel further submitted that since the operational receipts of plaintiff was only Rs. 71,35,000/- namely less than Rs. 1,00,00,000/- for the assessment year 2016-2017, Tax Audit under Section 44AB of Income Tax Act was not mandatory to the plaintiff. The learned counsel further submitted that even assuming but not admitting that the plaintiff had violated any of the provision of Income Tax Act, it is for the tax official to take appropriate action against the plaintiff and mere violation of Income Tax Act cannot be a ground for the defendant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd from them the plaintiff got illegal custody of the documents. In order to prove the alleged money transactions with Adeshwar Investments and handing over of suit pronotes and property documents to them, the defendants have not examined any independent witness. Naresh Sanchetti who is alleged to have brokered the deal with the defendant to Adeshwar Investment was not examined by the defendants in support of their case. When DW.1 was cross examined by the plaintiff, he was questioned about the steps taken by the defendants to get back the original property documents and blank pronotes handed over allegedly to the Adeshwar Investment after settlement of alleged money transactions, the defendants witness gave an evasive answer as if he would like to check up with his records. The witness also said, he had not preferred any complaint against Adeshwar Investments for their failure to return the documents. The question Nos.47 to 49 addressed to DW.1 and his answers are very relevant in this regard. Therefore, it is abundantly clear that the defendants have not taken any steps to get back the promissory notes and property documents allegedly handed over to Adeshwar Investment, after set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry presumption under Section 118 of Negotiable Instruments Act. The learned counsel for the defendants by drawing attention of this Court to the difference in ink used in the promissory notes submitted that it would amount to material alternation vitiating the validity of the promissory note. Mere difference in the ink would not vitiate the Negotiable Instruments. A look at the suit promissory notes would make it clear that the signatures of the defendants are in black ink. The date of the instrument, name of the creditor are written in a different ink. The place of execution and value of the promissory notes in words as well as in figures are written in different ink. However, merely because the name of the creditor and date of the instruments are filled up with a different ink, we cannot come to a definite conclusion that there is a material alteration in the suit promissory note vitiating is validity. First of all, the defendants have not made any specific plea with regard to the material alteration in his pleadings. Therefore, it is not open to them to make submission regarding material alteration without a plea. Further under Section 20 of Negotiable Instruments Act, a person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it will not render the entire transaction as invalid. As far as RBI circular relied on by the learned counsel for the defendants is concerned, it was issued on 09.03.2017 subsequent to the suit transaction. Therefore, the same cannot be pressed into service in respect of the transaction which had taken place prior to the date of circular. However, Section 269 SS of Income Tax Act was very much available when the suit transaction had taken place. 15. A perusal of Section 269 SS of Income Tax would suggest that no person shall take or accept from any other person any loan or deposit otherwise than by the account payee cheque or account payee bank draft or by electronic mode when the amount of such loan or deposit is Rs. 20,000/- are more. Therefore, it prohibits a person who is taking or receiving the loan. Whether the prohibition is equally applicable to the lender of the amount is not very clear. In any event, in case of violation of Section 269 SS of Income Tax Act, the violator is liable to be proceeded against in accordance with law by the income tax authorities. Subject to such proceedings liable to be initiated by the tax authorities, the plaintiff is entitled to mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he suit transaction cannot be termed as illegal transactions. In the case law referred by the learned counsel for the defendants, the plaintiff therein failed to produce income tax returns before the Court to show that the suit transaction was reflected in its income tax returns. Therefore, this Court in the above said decision held that adverse inference shall be drawn against the plaintiff therein. However, in the case on hand, the plaintiff produced Ex.P14 income tax return and proved that the suit transaction is reflected in plaintiff's income tax returns. 19. The learned counsel for the defendants further submitted that the plaintiff failed to prove its source of money for lending such a huge amount to the defendants. As rightly pointed out by the learned counsel for the plaintiff, it is seen from Ex-P14, plaintiff received a sum of Rs. 1,09,30,000/- from sale of the land situated at East Coast Road in the financial year 2015- 2016. As per the fixed assets shown in the income tax returns, the value of the plot at ECR was Rs. 26,42,000/- . Ex.P14, the profit earned by the plaintiff on sale of plot was shown as Rs. 82,88,000/-. Therefore, it appears plaintiff received a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or insufficient. In the first case, merely because a document has been marked as 'an exhibit', an objection as to its admissibility is not excluded and is available to be raised even at a later stage or even in appeal or revision. In the latter case, the objection should be taken before the evidence is tendered and once the document has been admitted in evidence and marked as an exhibit, the objection that it should not have been admitted in evidence or that the mode adopted for proving the document is irregular cannot be allowed to be raised at any stage subsequent to the marking of the document as an exhibit. The later proposition is a rule of fair play. The crucial test is whether an objection, if taken at the appropriate point of time, would have enabled the party tendering the evidence to cure the defect and resort to such mode of proof as would be regular. The omission to object becomes fatal because by his failure the party entitled to object allows the party tendering the evidence to act on an assumption that the opposite party is not serious about the made of proof. On the other hand, a prompt objection does not prejudice the party tendering the evidence, for two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax returns Ex.P14 regarding sale profits received by the plaintiff by sale of land in ECR; (v) General statutory presumption available under Section 118 of Negotiable Instruments Act; (vi) Authority available to the holder of negotiable instrument under Section 20 of Negotiable Instruments Act. 24. By taking into consideration the above mentioned established facts and statutory presumptions, this Court comes to a conclusion that the plaintiff proved its case by preponderance of probabilities. Accordingly, Issue Nos.1 and 2 are answered in favour of the plaintiff. 25. Issue No.3: In view of the answer to issue Nos.1 and 2, the plaintiff is entitled to decree for recovery of money as prayed for. As far as the rate of interest is concerned, having regard to the fact that the suit transaction is a commercial one, this Court deems it appropriate to direct the defendants to pay the principal amount of Rs. 2,49,00,000/- with interest at the rate of 12% per annum from 19.06.2015 to date of actual realization of the amount. In view of the facts and circumstances of the case, the plaintiff is entitled to cost of the suit from the defendants. S.SOUNTHAR, J. 26. Concl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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