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TMI Blog2022 (9) TMI 993X X X X Extracts X X X X X X X X Extracts X X X X ..... of suit till the date of realization towards recovery of amounts due and payable by the defendant against a loan provided by Suresh Prabhu to Ramesh; and for a permanent injunction to restrain Ramesh from interfering with Suresh Prabhu's peaceful possession and operation of business in the name and style of C3 Fitness Science at the centres in Vepery and Kilpauk. 2. C.S.(Comm.Div)No.68 of 2021 was filed subsequently by Ramesh against Suresh Prabhu for recovery of a sum of Rs.3,11,58,000/- together with interest at 18% per annum from 17.04.2021 until realization; and for a permanent injunction to restrain Suresh Prabhu from interfering with Ramesh's peaceful possession and operation of business in the name and style of C3 Fitness Science at the centres in Vepery and Kilpauk. 3. Suresh Prabhu stated the following. He established a fitness centre under the name and style of C3 Fitness Science. The said fitness centres functioned at New No.11/1, Ritherdon Road, Vepery, Chennai - 600 007 pursuant to Lease Deed dated 06.07.2017, and at No.17, Lakshmi Street, Kilpauk, Chennai - 600010 under Lease Agreement dated 30.09.2017. The necessary licenses were obtained in relation to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emic. 5. Suresh Prabhu stated that he was shocked to receive an email of 17.04.2020 from Ramesh claiming that he invested 50% of the amounts towards the establishment and operation of C3 Fitness Science Centres at Vepery and Kilpauk. Suresh Prabhu asserts that the following are due and payable by Ramesh: interest on the loan under the MoA for the period December 2017 to February 2020; royalty under the Franchise Agreement for 26 months from January 2018 to February 2020; and a sum of Rs.1,40,00,000/- towards the amount borrowed by Ramesh along with interest thereon. He stated that the email referred to above was issued with a view to evade and delay payment of amounts due and payable by Ramesh to him. Likewise, it is stated that two notices dated 08.06.2020 were also issued by Ramesh to him with the same object and purpose. According to Suresh Prabhu, the claim made by Ramesh that a sum of Rs.2,70,00,000/- was payable by him to Ramesh by way of settlement and that, in the alternative, possession of the gyms at Vepery and Kilpauk should be handed over is against law and unsustainable. Suresh Prabhu stated that C.S.(Comm.Div)No.183 of 2020 was filed in the above facts and circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 dated 22.05.2020 for Rs.5,00,000/-. Upon presentation of cheque No.832544 dated 22.03.2020 for Rs.5,00,000/-, the said cheque was dishonoured with the endorsement ''payment stopped by the drawer''. Therefore, Ramesh issued a lawyer's notice under Section 138 of the Negotiable Instruments Act,1881(the NI Act) and called upon Suresh Prabhu to pay the value of the dishonoured cheque and also make payment of a sum of Rs.2,70,00,000/-. Suresh Prabhu failed to make payments and instead took over the office of Ramesh at the Fitness Centres at Vepery and Kilpauk and also removed documents and cheques of Ramesh from the said office. C.S.(Comm.Div) No.68 of 2021 was filed in the said facts and circumstances. 9. Upon completion of pleadings, the following issues were framed in C.S.(Comm.Div)No.183 of 2020: (i) Whether the defendant was the owner of the two business centers and it was handed over to the plaintiff only to maintain the same? (ii) Whether the defendant had made any contributions to run the business centers along with the plaintiff? (iii) Whether the plaintiff has established through any materials that there was a contractual obligation on the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hu extended a loan of Rs.40,00,000/- to Ramesh under the MoA and that interest at Rs.1,46,650/- is due and payable on monthly basis in respect thereof. His next submission was that the Franchise Agreement was executed by Ramesh and Suresh Prabhu and that a sum of Rs.30,000/- per month is payable as royalty in terms thereof. He also pointed out that a loan of Rs.1,35,00,000/- was granted by Suresh Prabhu to Ramesh and that this loan was secured by three promissory notes issued between 28.11.2018 and 25.02.2019. He stated that the loan was given in the form of cash. The said loan carried interest and interest payments were made up to November 2017. He also stated that Ramesh issued cheque dated 15.07.2020 for Rs.30,00,000/-, cheque dated 15.08.2020 for Rs.35,00,000/-, cheque dated 15.09.2020 for Rs.35,00,000/- and cheque dated 15.10.2020 for Rs.35,00,000/- towards repayment of the loan. By referring to the statements of account from the Indian Overseas Bank in relation to Saving Bank Account No.273802000000333 and Current Account No.273802000009333 at Indian Overseas Bank, he contended that the said bank statements, which were exhibited as Exs.P54 and P55, evidence the financial capa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the alleged agreement between Ramesh and Fitness One was prior to the MoA under which a sum of Rs.40,00,000/- was borrowed by Ramesh. With reference to the trademark certificate obtained by Ramesh, he submitted that such certificate was obtained by making the false statement that Ramesh had used the mark C3 Fitness Science from 07.05.2015. With reference to the alleged settlement by which Suresh Prabhu agreed to pay Ramesh a sum of Rs.2,55,00,000/-, he stated that there was no reference thereto in the complaint filed by Ramesh before the police. By drawing reference to the cross examination of Ramesh and, in particular, questions 19 to 22, 27,28,35 and 75, he stated that there is no evidence whatsoever that Suresh Prabhu agreed to pay a sum of Rs.2,55,00,000/- to Ramesh. 16. By way of a short response, learned counsel for Ramesh submitted that the story that a loan was extended is completely improbable. There was no demand for repayment of the alleged loan. As regards equipment purchase, he submitted that the email I.D. and phone number provided in the relevant document is that of Ramesh. Issue No.6 in C.S.(Comm.Div)No.183 of 2020 17. Issue No. 6 relates to whether Suresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is so improbable that a prudent person would not accept the fact that there is consideration. In Bharat Barrel, the Hon'ble Supreme Court referred to the judgment of the Full Bench of the Rajasthan High Court in Heerachand v. Jeevrai and another, AIR 1959 Raj. 1 and other relevant judgments, before holding as under in paragraph 14: ''14.Upon consideration of various judgments as noted hereinabove, the position of law which emerges is that once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non-existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would dis-entitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tements and the evidence relating thereto should be examined closely. 20. The contention of Suresh Prabhu is that the loans were extended between 28.11.2018 and 25.02.2019 by way of cash. To begin with, it is difficult to believe that such large amounts were given as loans in the form of cash. It is not without reason that the law does not permit a person to extend cash loans of such magnitude. Even going by past conduct, Suresh Prabhu extended a loan of Rs.40 lakhs in 2017 by issuing two cheques that were drawn on his account with the Indian Overseas Bank. Assuming such a large loan was given in cash, at a minimum, there should be communications by way of letters, emails or even whatsapp messages relating to the request for or provision of the loan. Admittedly, no such communication is on record. Although the loan was allegedly given between end 2018 and early 2019, the first communication that refers to the loan is the email dated 18.04.2020 from Suresh Prabhu to Ramesh in response to Ramesh's email of 17.04.2020 alleging that Suresh Prabhu had not provided proper accounts to Ramesh as regards the fitness centres in which he had invested 50%. This is admitted in response to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Besides, all the withdrawals are under self cheques for amounts far smaller than the loan tranches with no credible explanation for not issuing cheques in favour of Ramesh. Moreover, the withdrawal of amounts from a bank account by the account holder does not establish that loans were given to Ramesh. Even if loans were extended without executing a loan agreement or any other formal document, ordinary human conduct is to engage in communication relating to the provision of the loan and the terms of repayment. The evidence on record in this case discloses the complete absence of communication between the parties during the period November 2018 to end February 2019, when such loans were allegedly provided by Suresh Prabhu to Ramesh. According to Suresh Prabhu, the loans were not repaid by Ramesh and that this necessitated the filing of this case. Once again, normal human behavior would be to call upon the defaulter to repay the amounts. Except for the email of 18.04.2020 in response to the email of 17.04.2020 from Ramesh, any communication by which Suresh Prabhu called upon Ramesh to repay the amounts is conspicuous by its absence. In light of the evidence on record, the only reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable in respect of the alleged loan of Rs.1,35,00,000/-. As a corollary, the defence of Suresh Prabhu is untenable and liable to be rejected. Since Suresh Prabhu admits receipt of the aggregate sum of Rs.1,88,69,000/-, as regards the said sum, Ramesh has established that he contributed the said sum. In addition, Ramesh asserted that he contributed a sum of Rs.1,12,00,000/- towards payment for interior decoration and other expenses. In order to establish this assertion, Ramesh relied upon installation reports, invoices and delivery challans relating to the purchase of equipments for the fitness centres. The said documents were exhibited as Exs.P30 to P43. In addition, Ramesh relied upon vouchers relating to expenses incurred for the fitness centres and these documents were exhibited as Exs.P45 to P61. On perusal of the installation reports that were exhibited as Exs.P30 and P31, it is noticeable that the name of the customer is indicated as C3 Fitness Science at Vepery. The name of the contact person is mentioned as Mr.Ramesh and his mobile number and email address is specified. Significantly, Ramesh has signed these installation reports as the customer. The invoices, however, bea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is liable to make payments to Ramesh and Ramesh's entitlement thereto. Since these issues are inter-related, they are dealt with jointly. Ramesh asserted that a settlement was reached between Suresh Prabhu and him and that Suresh Prabhu agreed to pay a sum of Rs.2,55,00,000/- to Ramesh on or before 30.06.2020 along with a further sum of Rs.20,00,000/- as interest profit share (sic) as consideration for Ramesh exiting from the fitness centres jointly owned by them. The admitted position is that there is no documentary evidence with regard to an agreement for payment of the above mentioned amount by Suresh Prabhu to Ramesh. In the absence of documentary evidence, the oral evidence merits careful consideration. Ramesh made the above assertion in the proof affidavit at paragraph 20. Ramesh also asserted at paragraph 22 of the proof affidavit that Suresh Prabhu issued four cheques for an aggregate sum of Rs.20,00,000/- towards part payment of the settlement amount of Rs.2,55,00,000/-. It was further stated that one cheque for Rs.5,00,000/- was cleared but that the next cheque was returned with the endorsement ''payment stopped by the drawer''. In course of cross exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ramesh. Indeed, Ramesh admits this interest liability in answer to questions 65 to 67 in cross-examination and the relevant deposition is set out below: "Q65: According to Ex.P5 in CS 183/2020 you have to pay Rs.1,46,650/- per month Suresh Prabhu towards interest? A: Yes. Q66: Is it correct that the above said amount of Rs.1,46,650/- was paid by you till the month of November, 2017? A: Yes from my account I have paid Q67: You have not paid from December, 2017 to till date? A: From December, 2017 Suresh Prabhu started to adjust the said amount from the profit share due to be paid to me from Vepery and Kilpauk centres till I settled the entire amount." 29. While Ramesh contends that Suresh Prabhu adjusted this amount from and out of the revenues of the fitness centres, in the absence of evidence, the said contention cannot be accepted. Suresh Prabhu claimed interest at 18% per annum on the claim of Rs.39,59,550 from the date of plaint until realisation. In effect, interest is claimed on an interest claim. Ordinarily, interest liability is specified at an agreed rate and not at a specified and quantified sum per month. In this case, however, the interest liability i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are relevant in this regard. Besides, as is evident from the answer to question 58, there is no documentary evidence on record that royalty payments were demanded before the suit was filed. In the absence of any evidence that the agreements were acted upon by the parties, Suresh Prabhu is not entitled to this amount. Accordingly, Issue No.5 is decided against Suresh Prabhu and in favour of Ramesh. Additional Issues on injunctive relief: 32. As discussed earlier, the evidence on record leads to the inference that the two parties were joint stakeholders in the C3 Fitness Science Centres at Vepery and Kilpauk. The evidence further discloses that substantial amounts were invested by Ramesh in such regard. However, Ramesh failed to prove that Suresh Prabhu agreed to purchase Ramesh's stake in the business for a sum of Rs.2,55,00,000/-. Consequently, both Ramesh and Suresh Prabhu are entitled to jointly manage the two centres. Suresh Prabhu contended that Ramesh is admittedly not in possession and that he is entitled to injunctive relief as the party in possession. However, the injunctive relief claimed by Ramesh extends to non-interference in the operation of the business. Even ..... X X X X Extracts X X X X X X X X Extracts X X X X
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