Gupta challenged the orders of the trial court and the appellate court, which had dismissed his recovery claim of Rs 2.84 lakh in 2018 and 2024, respectively.
“The plea of the defendant (vendor) that he was illiterate and that the settlement was involuntary cannot be countenanced. If the settlement was truly coercive, there was no reason for the defendant to have acted upon it by paying six consecutive instalments of Rs 10,000 each, spread over a period of nearly seven months, instead of lodging a protest or issuing a notice to the plaintiff (man),” the order read.
The Delhi High Court noted that the vendor claimed to have taken only Rs 20,000, but found his conduct ‘inconsistent” as he had paid six instalments under the said settlement.
‘No reason to pay instalments’
- The Delhi High Court observed that if the loan was of Rs 20,000, there was no reason or occasion for the vendor to have issued the cheque in October 2014 for a sum of Rs 3.20 lakh.
- It held that the recitals in a written document take precedence over oral testimony, which was completely “overlooked” by the civil judge as well as the district judge.
- The Delhi High Court found that there is a serious illegality in law committed by both the said judges.
- The settlement agreement bears the admitted signatures of the vendor and contains the complete terms of the compromise between the parties, including the loan amount, the settled amount, the schedule of instalments and the consequences of default.
- The court pointed out that the vendor’s attempt to contradict these express terms by oral testimony of an earlier loan of Rs 20,000 is, therefore, “impermissible” in law.
- The Delhi High Court found that the case of the man stands duly supported by the documents on record, including the cheque, the return memo, the settlement and the legal notice.
- It was, on the other hand, noted by the court that the vendor’s case rests on bald assertions, unsupported by any document whatsoever.
- It said the vendor, without any justification, committed a breach of the terms of the settlement and failed to make further payments after paying six instalments.
- The court directed that the lender is entitled to a recovery of Rs 2.60 lakh.
Background
Both the lender and the vendor were previously residents of the same locality and were well known to each other, the Delhi High Court was informed. The vendor took a loan of Rs 3.20 lakh on September 15, 2013, stating that he was under financial stress as he had purchased a house in August 2011 and had also got his son married.
Story continues below this ad
It was placed on record that he promised to pay in a year’s time, including interest at the rate of 18 per cent per annum.
The vendor, however, allegedly failed to pay the loan amount, and when the man insisted, he issued a cheque on October 21, 2014, for Rs 3.20 lakh in favour of the man, with an assurance that on presentation, the cheque would be encashed.
It was claimed before the Delhi High Court that the cheque, however, was presented for encashment on January 16. 2015, but was dishonoured with the remark “accounts closed”. The man allegedly immediately approached the vendor for the return of the loan and also served a demand notice in February 2015 asking him to repay the loan amount.
It was added that with the intervention of common friends, the dispute was amicably settled, and the vendor agreed to pay a sum of Rs 1 lakh in instalments.
Story continues below this ad
Subsequently, the parties entered into a settlement on March 16, 2015, in the presence of witnesses. It was placed on record that clause 4 of the said settlement provided that, in the event of the vendor’s failure to pay two consecutive instalments, the man would be at liberty to claim the entire loan amount of Rs 3.20 lakh.
The vendor allegedly paid five instalments of Rs 10,000 each from March 2015 till August 2015, and one further instalment in October 2015, thereby paying a total sum of Rs 60,000. However, it was claimed that the vendor failed to pay any instalment from October 2015 onwards and thus failed to honour the settlement deed.
Aggrieved by the same, the man filed the present case for recovery of Rs 2.84 lakh.
‘Took loan in 2010’
The vendor asserted before the Delhi High Court that he is educated only up to Class 2. He earned his livelihood by selling “chole kulche” on a rehri (street food cart) at Chawri Bazar in Delhi.
Story continues below this ad
He claimed that he had taken a loan in 2010. On the insistence of the man, he added that he issued a blank, signed cheque drawn on the State Bank of India (SBI). However, he received only a sum of Rs 20,000.
He further claimed that, being an uneducated and God-fearing person, he started repaying the said loan amount of Rs 20,000 in instalments, as agreed between the parties, at the time of advancement of the loan. It was also asserted that the man used to maintain a record of the amounts received from him.
He contended that the present litigation has been initiated solely to harass him. Additionally, it was alleged before the Delhi High Court that the man is a professional moneylender who has committed fraud upon innocent persons, including him, and, being unlicensed, was not entitled to advance a loan.
Justice Neena Bansal Krishna found that the vendor’s case rested on bald assertions, unsupported by any document.