2021 INSC 0857
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
Civil Appeal Nos. 7750­7751  of 2021
(Arising out of Special Leave Petition (C) Nos.12558­12559 of 2018)
ANITA RANI      ... Appellant (s)
Versus
ASHOK KUMAR & ORS.       ... Respondent(s)
J U D G M E N T
V. Ramasubramanian, J.
1. Leave granted.
2. The two money suits filed by her having been dismissed by the
trial   Court,   but   decreed   by   the   First   Appellate   Court   and   the
decrees   so   passed   by   the   First   Appellate   Court   having   been
reversed   by   the   High   Court   in   two   second   appeals,   the   plaintiff­
appellant   is   back   to   square   one   and   is   before   us   in   the   above
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appeals.
3. We   have   heard   Shri   Rajiv   Bhalla,   learned   counsel   for   the
appellant   and   Shri   Nidhesh   Gupta,   learned   senior   counsel   for   the
respondents.
4. The   appellant   herein   filed   two   suits   in   Civil   Suits   No.15643
and   15592   of   2007   against   the   respondents   herein,   on   the   file   of
the   Court   of   the   Civil   Judge   (Junior   Division),   Chandigarh,   for
recovery   of   (i)   a   sum   of   Rs.10,48,000/­   in   the   first   suit;   and   (ii)   a
sum   of   Rs.67,31,000/­   in   the   second   suit.   The   averments   in   the
first   suit   were   as   follows:   (i)   that   the   second   respondent   herein   is
the   sister   of   the   appellant’s   husband;   (ii)   that   the   first   respondent
is   the   husband   and   the   third   respondent   herein   is   the   son   of
respondent   No.2;   (iii)   that   the   respondents   herein   (defendants   in
the   suit)   were   carrying   on   the   business   of   dealing   in   building
materials   under   the   name   and   style   of   Prem   Chand   Amar   Chand;
(iv)   that   the   appellant   and   her   son   are   having   a   joint   account   in
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ICICI   Bank,   Sector­9,   Chandigarh,   where   the   respondents   also
maintain   an   account;   (v)   that   the   respondents   borrowed   a   sum   of
Rs.10,50,000/­from   the   appellant   on   18.11.2003,   by   way   of   a
cheque;   (vi)   that   though   the   respondents   refunded   a   sum   of
Rs.5,00,000/­ on 7.08.2006, promising to repay the balance within
six   months,   they   failed   to   honour   the   commitment;   (vii)   that,
therefore,   the   respondents   were   liable   to   pay   a   sum   of
Rs.5,50,000/­towards   principal   and   a   sum   of   Rs.4,98,000/­
towards interest, thus, totaling to Rs.10,48,000/­.
5. The   averments   in   the   second   suit   in   brief   were   as   follows:   (i)
that in the year 2001­2002, respondent No.1 lured the plaintiff and
her husband to join him in his real estate business:   (ii)   that since
the appellant and her family were residing in Kurukshetra and the
respondents were living in Chandigarh, the respondent No.1 got the
signature   of   the   appellant   in   some   blank   papers,   on   the   ground
that   it   was   not   possible   to   shuttle   every   time   between   these   two
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places,   whenever   a   transaction   was   to   be   completed;   (iii)   that   the
appellant  and her  son were  having account  in the  same branch  of
the same bank in which respondent Nos.1 and 2 were also having
account;  (iv)  that with a view to make available necessary funds, for
the   use   of   respondent   No.1   in   real   estate   dealings,   the   appellant
and her son kept substantial amounts to their credit in their bank
account;   (v)   that   in   March,   2006   the   appellant   and   her   husband
were   shocked   to   find   that   substantial   amounts   totaling   to
Rs.54,50,000/­ had been withdrawn from their account on different
dates by the respondents;  (vi)  that on her request, the bank officers
produced   the   records,   which   disclosed   that   a   cheque   dated
30.12.2005   for   a   sum   of   Rs.25,00,000/­,   signed   by   respondent
No.3   by   forging   the   signature   of   the   plaintiff   had   been   encashed,
apart from the withdrawal of a sum of Rs.9,50,000/­ on 9.05.2005
and  the  transfer  of  another  sum  of  Rs.20,00,000/­  purportedly  on
the   written   request   of   the   appellant   on   27.8.2005;   (vii)   that   the
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withdrawals/ transfer of these amounts were not authorized by the
appellant, but had been done by misusing the signatures obtained
from   the   appellant;   (viii)   that   after   finding   out   these   facts,   the
appellant lodged a complaint in FIR No.195 on 14.12.2006 against
the   respondents   for   the   offences   punishable   under   Sections   420,
467,   468   and   471   read   with   Section   120­B   of   the   Indian   Penal
Code;  (ix)  that the respondents were granted anticipatory bail in the
criminal   case,   upon   their   furnishing   bank   guarantee   for   a   sum   of
Rs.50,00,000/­ and  (x)  that the amounts withdrawn by/transferred
to the account of the defendants, together with interest @ 12% per
annum   worked   out   to   Rs.67,31,000/­   and   (xi)   that   therefore   they
were filing the suit for recovery of the said amount.
6. The   case   of   the   respondents   in   the   first   suit   for   recovery   of
Rs.10,48,000/­   was:   (i)   that   they   never   borrowed   any   money   from
the   appellant;   (ii)   that   the   amount   received   by   them   under   the
cheque   dated   18.11.2003   was   for   the   purpose   of   investment   in   a
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property,   which   was   part   of   the   real   estate   business;   (iii)   that   the
payment   of  Rs.5,00,000/­   made  by   them  on   7.08.2006  was   in  full
and final settlement of the claim, after a compromise was arrived at
the intervention of three persons by name Satish Kumar, Prem Raj
Aggarwal   and   O.P.   Gupta;   and   (iv)   that   since   there   was   no
borrowing,   the   question   of   payment   of   interest   does   not   arise   and
that the suit was liable to be dismissed.
7. In their written statement of the second suit, it was contended
by   the   respondents:   (i)   that   the   appellant   and   the   respondents
started doing real estate business jointly from the year 2001­2002;
(ii)   that   they   purchased   and   sold   many   properties   and   shared   the
profits;   (iii)   that   the   respondents   never   got   the   signatures   of   the
appellant in blank papers;  (iv)  that the amounts represented by the
cheques   dated   9.05.2005,   27.08.2005   and   30.12.2005   were
towards   the   investment   made   by   the   appellant   and   her   son   in   the
real   estate   business;   (v)   that   the   appellant   issued   confirmation
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letters   to   the   bank,   which   showed   that   the   payments   under   those
cheques   were   authorized   payments;   (vi)   that   the   appellant’s   son
actually   gave   an   affidavit   both   on   his   behalf   and   on   behalf   of   the
appellant;   (vii)   that   in   the   said   affidavit,   it   was   admitted   by   the
appellant’s   son   that   out   of   the   amounts   paid   under   the   three
cheques,   a   sum   of   Rs.30,00,000/­   was   given,   out   of   love   and
affection;   (vii)   that  the appellant  filed a  false complaint,  as though
the   respondents   cheated   her   and   withdrawn   money   by   forging   the
signatures;   (viii)   that   in   view   of   the   allegations   against   the   bank,
the   appellant   ought   to   have   impleaded   the   bank   as   a   party   to   the
suit and   (ix)   that no money is due and payable by the respondents
to the appellant.
8. Before the trial Court, the appellant examined her husband as
PW­1   and   examined   herself   as   PW­2.   The   first   respondent
examined  himself as  DW­1 and  he examined  as DWs  2 and  3, the
third   party   mediators,   in   the   presence   of   whom   a   settlement   was
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purportedly arrived at. The respondents marked a photocopy of the
letter   addressed  to   the  Manager   of  the   bank  bearing   the  signature
of   the   appellant   as   Exhibit   D­1.   They   also   filed   the   confirmation
letter dated 2.01.2006 as Exhibit D­2 and the affidavit purportedly
signed   by   the   appellant’s   son   both   on   his   behalf   and   on   behalf   of
the appellant, as Exhibit D­3.
9. By   a   judgment   and   decree   dated   23.01.2013,   the   trial   Court
dismissed   the   first   suit   on   the   ground   that   the   appellant­plaintiff
failed to establish the advancement of the loan and that her failure
to examine her son, who was the joint account holder, as  a witness
in   the   suit,   was   fatal.   The   trial   Court   also   held   the   suit   was   not
within the period of limitation. 
10. By   a   separate   Judgment   and   decree   dated   22.07.2013,   the
trial Court dismissed the second suit on the ground that the parties
were in real estate business and that the payment of Rs.5,00,000/­
in   full   and   final   settlement   on   7.08.2006,   stood   proved   by   the
version of third party mediators examined as DW­2 and DW­3.  The
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Court   also   held   that   the   appellant   failed   to   establish   fraud   on   the
part of the respondents.
11. The   district   Judge,   Chandigarh   by   two   separate   Judgments
dated 18.03.2015, allowed the first appeals filed by the appellant in
Civil Appeal Nos.903 and 1056 of 2013 and granted a decree in the
first   suit   for   recovery   of   Rs.5,50,000/­   together   with   interest   @
7.5%   per   annum   from   the   due   date   till   the   date   of   decree   and
interest @ 6% per annum from the date of the decree till realization.
In   the   second   suit,   the   trial   court   granted   a   decree   for   recovery   of
Rs.54,50,000/­   together   with   interest   @   7.5   %   per   annum   till   the
date of the decree and @ 6% per annum from the date of the decree
till realisation.
12.   The respondents filed two second appeals in RSA Nos.6134 of
2015   and   130   of   2016.   Both   the   second   appeals   were   allowed   by
the   High   Court   by   a   Judgment   and   decree   dated   20.03.2018
resulting   in   the   dismissal   of   the   2   money   suits   filed   by   the
appellant.   Not   stopping   with   the   mere   allowing   of   the   appeals,   the
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High Court went a step further by directing the appellant to refund
the amount of Rs.55,00,000/­ paid by the respondents, by virtue of
the order passed in the anticipatory bail application, together with
interest  @ 7% per annum. It is against the said common judgment
that the plaintiff­appellant has come up with the above appeals.
13. The   Contention   of   the   Shri   Rajiv   Bhalla,   learned   counsel   for
the appellant is that the trial Court as well as the High Court went
completely on a wrong track by accepting the plea of full and final
settlement set up by the respondents and that the High Court went
overboard   in   passing   an   order   for   refund   of   money   paid   in   the
proceedings for grant of anticipatory bail.  
14. Per   contra,   it   is   contended   by   Mr.   Nidhesh   Gupta,   learned
senior   counsel   for   the   respondent   that   the   failure   of   the   appellant
to implead her son as a co­plaintiff or atleast to examine him as a
witness,   coupled   with   her   own   admissions   as   PW­2,   falsified   her
case. Once it was found that the payments to the respondents were
authorized   and   once   it   was   established   through   third   party
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mediators   that   there   was   a   settlement,   the   appellant­plaintiff   was
bound   to   fail   and   that   therefore,   the   judgment   of   the   High   Court
does not warrant any interference.
15. We   have   carefully   considered   the   rival   contentions   and   have
also gone through the pleadings, evidence and the Judgments of all
the three Courts.
16. As we have seen earlier, the first suit was for recovery of a sum
of   Rs.5,50,000/­,   which   remained   unrefunded,   out   of   the   amount
of   Rs.10,50,000/­   allegedly   paid   by   way   of   loan.   The   receipt   of
Rs.10,50,000/­ by way of cheque No.459745 dated 18.11.2003 was
admitted   by   the   respondents.   Similarly   the   re­payment   of
Rs.5,00,000/­   by   the   respondents   to   the   plaintiff­appellant     on
7.08.2006 is admitted by the appellant. The only defence set up by
the   respondents   was   that   the   payment   of   Rs.5,00,000/­   made   by
them on 7.08.2006 was by way of full and final settlement. To show
that   there   was   a   full   and   final   settlement,   the   respondents
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examined   two   third   party   mediators.   But   no   receipt   was   taken   by
the   respondents   from   the   appellant   that   the   payment   of
Rs.5,00,000/­ on 7.08.2006 was in full and final settlement. There
was   also   no   written   memorandum   of   compromise/settlement.
When payment of a certain amount of money and the repayment of
only   a   portion   of   the   same   are   admitted,   the   party   pleading   that
such a part repayment was in full and final settlement, has a huge
burden   cast   upon   him   to   show   that   there   was   a   settlement.   Oral
evidence   of  the   so  called   third  party   mediators,  is   not  sufficient   to
establish full and final settlement, in cases of this nature, where all
transactions   have   happened   only   through   banking   channels   and
the defendants claimed that there were business transactions. It is
unbelievable that the respondents, who reached such a settlement,
failed   to   have   the   same   recorded   in   black   and   white,   either   in   the
form of a memo or in the form of a receipt.
17. Interestingly,   Exhibit   D­3   filed   by   the   respondents   is   an
affidavit   purportedly   signed   and   verified   by   the   appellant’s   son   on
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8.03.2006,   both   on   his   behalf   and   on   behalf   of   his   mother   (the
appellant),   agreeing   to   treat   a   sum   of   Rs.30,00,000/­   paid   by   the
appellant,   as   a   payment   made   out   of   love   and   affection.   If,   on
8.03.2006, the appellant and her son were gracious enough to treat
a   huge   amount   of   Rs.30,00,000/­   as   one   made   out   of   love   and
affection, there could have been no occasion for a dispute requiring
mediation   at   the   intervention   of   third   parties,   on   7.8.2006,
resulting   in   the   payment   of   Rs.5,00,000/­   by   the   respondents   to
the   appellant   in   full   and   final   settlement.   Unfortunately,   all   the
three   Courts   failed   to   juxtapose   these   two   events   which   happened
in an interval of five months, to see through the game.
18. In  simple  terms,  the  case  of  the  appellant­plaintiff  in  the  first
suit   was   one   of   lending   and   non­payment.   The   defence   set   up   by
the   respondents   was   one   of   payment   of   a   lesser   amount   (than   the
original   amount),   in   full   and   final   settlement.   A   party   who   admits
receipt of certain amount of money on a particular date and pleads
discharge   by   way   of   a   full   and   final   settlement   at   a   latter   date,   is
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the   one   on   whom   the   onus   lies.   This   onus   was   not   discharged   by
the   respondents   in   the   first   suit   and,   hence,   the   plaintiff   was
entitled   to   succeed   in   the   first   suit.   The   High   Court   completely
overlooked this aspect.
19. Coming   to   the   second   suit,   the   case   of   the   appellant­plaintiff
was that various amounts of money were either withdrawn from or
transferred out of their accounts, by the defendants unauthorisedly
and that the amounts so taken away totaled to Rs.54,50,000/­. The
defence   of   the   respondents   was   that   the   amounts   represented
authorized   payments   for   the   purchase   and   sale   of   properties   in   a
real   estate   business   and   that   out   of   those   amounts,   a   sum   of
Rs.30,00,000/­   was   treated   as   a   payment   made   out   of   love   and
affection.  
20. Let   us   assume   for   a   moment   that   the   amount   of
Rs.54,50,000/­   either   withdrawn   or   transferred   from   out   of   the
account of the appellant by the respondents represented authorized
payments, made by the appellant towards investment in real estate
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business.   In   such   a   case,   the   respondents   are   obliged   to   produce
the   accounts   of   the   real   estate   business   and   show   how   those
amounts   were   accounted   for.   The   respondents   could   not   produce
any   books   of   account.   Therefore,   the   respondents   thought   it
convenient   to   claim   that   all   those   amounts   were   investments   in   a
real   estate   business   and   that   a   portion   of   it   was   agreed   to   be
treated as a gratuitous payment. Investments in business dealings
and   gratuitous   payments   do   not   normally   go   together.   As   in   the
first   case,   the   flow   of   money   from   the   account   of   the   appellant­
plaintiff   into   the   respondents’   account   is   admitted.   While   the
appellant­plaintiff   termed   such   a   flow   of   money   as   unauthorized
withdrawal /transfer, the respondents claimed the same to be part
of investment in real estate business. In the light of such a defence,
the onus, even in the second suit, was on the defence to show that
there were business dealings and that the amount stood completely
accounted for. No books of accounts were produced by the defence
to   show   that   the   amounts   that   flowed   out   of   the   plaintiff’s   bank
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account were absorbed and accounted for within business.
21. Exhibit   D­3   affidavit   is   a   very   curious   document   whose
admissibility   itself   is   questionable.   It   starts   with   a   solemn
affirmation   reading   “We   Anita   Rani,….   and   Sulabh   Singla…   do
hereby solemnly affirm and declare as under ”. But it is signed only
by   Singla.   According   to   this   affidavit,   sworn   on   8.03.2006,   the
appellant­plaintiff   and   her   son   had   given   Rs.30,00,000/­   to   the
respondents   out  of   love  and   affection.  The   affidavit  goes   further  to
say   that   there   was   no   transaction   between   the   deponents   and   the
respondents.   This   affirmation   allegedly   made   on   8.03.2006   that
there   was   no   transaction   between   them,   stands   in   contrast   to   the
claim of full and final settlement made on 7.08.2006.
22. In   a   suit   for   recovery   of   money,   a   defendant   admitting   the
receipt   of   money   but   pleading   that   the   same   was   a   gratuitous
payment, is obliged to prove that it was a gratuitous payment.  As a
matter   of   fact   Exhibit   D­3   affidavit   dated   8.03.2006   does   not   use
the expression   “gratuitous payment ”, but uses the expression   “love
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and   affection”.   But   this   affidavit   also   states   that   there   was   no
transaction   between   the   deponents   and   the   respondents.   Thus
while   placing   reliance   upon   this   affidavit,   the   defendants   actually
pleaded a mutually contradictory case, as reflected in paragraph 8
of the written statement which reads as follows:
“ It   is   added   that   from   the   aforesaid   amount,   a   sum   of   Rs.
30.00 lacs was given by the plaintiff to the defendants out of
love   and   affection   being   near   relations   and   there   was   no
transaction   between   plaintiff   and   defendants   to   that   effect.
Suit  for recovery of  the  amount  against  the  defendant  by the
plaintiffs is not maintainable as the defendants are under no
legal   obligation   to   pay   back   the   amount   to   the   plaintiff.   The
defendants   never   borrowed   the   amount   nor   are   under   any
obligation to pay back the amount to the plaintiff. Copy of the
affidavit   is   attached   herewith.   Subsequently,   the   defendants
had   settled   their   accounts   pertaining   to   sale   purchase   of
properties   jointly   as   well   as   other   properties   purchased   in
order to  run property dealer business  and  a sum  of  Rs. 5.00
lacs   was   paid   to   the   plaintiff   on   7.8.2006   in   full   and   final
settlement   of   her   claim   through   cheque   dated   7.8.2006   and
the said cheque has been encashed by the plaintiff. The said
compromise   was   got   arrived   at   by   the   intervention   of   Shri
Satish Kumar, S/o Shri Om Parkash, Prem Raj Aggarwal S/o
Shri   Dev   Raj   Aggarwal   and   Shri   O.P.   Gupta   S/o   Shri   Raghu
Nath   Gupta.   The   plaintiff   accepted   the   said   cheque   of   a   sum
of   Rs.   5.00   lacs   in   adjustment/settlement   of   all   the   accounts
with regard to the amounts  taken in satisfaction of  her claim
fully and finally.
23. If   as   per   the   above   pleadings   and   Ex.   D­3,   there   was   no
transaction,   but   a   huge   amount   of   Rs.30,00,000/­   was   treated   on
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8.03.2006   as  a   gratuitous  payment,   there  was   no  occasion   for  the
settlement   of   any   accounts   on   7.08.2006   resulting   in   a   full   and
final settlement of the claim.
24. If the parties have had business dealings from the year 2001­
2002,   it   is   hard   to   believe   that   a   part   of   the   amounts   that   flowed
out of the account of the plaintiff, was out of love and affection. The
only  piece  of  evidence  on  the  basis  of  which  the  gratuitous  nature
of   payment   is   sought   to   be   proved   is   Exhibit   D­3,   but   it   does   not
contain   the   signature   of   the   appellant.   Therefore,   the   plea   of
gratuitous payment is unbelievable and was not established by the
respondents.
25. Once   the   plea   of   gratuitous   payment   falls   to   the   ground,
Section   70   of   the   Indian   Contract   Act,   1872   will   come   into   play.
Section 70 reads as follows:­
“ 70. Obligation   of   person   enjoying   benefit   of   non­
gratuitous   act. ­   Where   a   person   lawfully   does   anything   for
another   person,   or   delivers   anything   to   him,   not   intending   to
do   so   gratuitously,   and   such   other   person   enjoys   the   benefit
thereof,   the   latter   is   bound   to   make   compensation   to   the
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former   in   respect   of,   or   to   restore,   the   thing   so   done   or
delivered.”
26. As   held   by   this   Court   in   the   State   of   West   Bengal   vs.   B.K.
Mondal   &   Sons 1
,   Section   70   is   based   on   the   premise   that
something was done by one party for another and that the work so
done   voluntarily,   was   accepted   by   the   other.   Therefore,   as   a
corollary,   the   plea   that   there   was   a   subsisting   contract   in   the
nature of business transactions, is antithetic to the very essence of
section   70.   This   is   why   section   70   forms   part   of   Chapter   V   of   the
Indian   Contract   Act,   which   is   titled   as   “Of   certain   relations
resembling those created by contract”.
27. As pointed out earlier, the respondents have admitted that the
moneys as claimed by the appellant­plaintiff were either paid by the
plaintiff   or   flown   out   of   the   plaintiff’s   account   into   their   own
account.   Therefore,   the   onus   was   actually   on   the   respondents   to
prove   either   a   discharge   by   way   of   settlement   of   accounts   or   the
gratuitous nature of the payment. The respondents miserably failed
1     AIR 1962 SC 779
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to   discharge   the   onus   of   proof   so   cast   upon   them.   Hence,   the
plaintiff­appellant is entitled to a decree despite a few discrepancies
in her evidence, especially when the discrepancies have no bearing
upon   the   payment/flow   of   monies   from   the   plaintiff   to   the
defendants. 
28. In  view  of  the  above,  the  appeals  are  allowed.    The  Judgment
and decrees of the High Court are set aside and the Judgment and
decrees   of   the   First   Appellate   Court   are   restored.   In   other   words,
there will be a decree in both the suits, as per the Judgment of the
District   Court,   Chandigarh   dated   18.03.2015   in   Civil   Appeal
Nos.903 and 1056 of 2013. The appellant will be entitled to costs in
these   appeals   which   we   quantify   at   Rs.50,000/­.     The   amount
deposited   by   the   appellant   pursuant   to   the   Order   passed   by   this
Court   on   18.05.2018   and   deposited   in   an   interest   bearing   fixed
deposit pursuant to the Order passed by this Court on 14.12.2018
shall be released by the Registry to the appellant together with the
accrued interest.
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 … ..…………....................J.
      (Hemant Gupta)
.…..………......................J
(V. Ramasubramanian)
DECEMBER 16,  2021
NEW DELHI .
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