- 1 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE ASHOK S.KINAGI REGULAR SECOND APPEAL NO. 1660 OF 2014 (MON) BETWEEN: SRI VENKATARAMAIAH, S/O LATE JAVARAIAH, AGED ABOUT 68 YEARS, R/A HOSAKERE GRAMA, AMRUTHUR HOBLI, KUNIGAL TALUK, TUMKUR DISTRICT-572 121. &APPELLANT (BY SMT/MISS. TEJASWINI .R AND SRI. P.M. GOPI, FOR SRI. SIDDAMALLAPPA P M., ADVOCATES) AND: 1. SRI T. SREENIVAS, S/O LATE THIMMAIAH, AGED ABOUT 46 YEARS SINCE DEAD BY HIS LR9S, RESPONDENT NOS.2 TO 4 ARE THE LEGAL HEIRS OF RESPONDENT NO.1 Digitally signed by SUNITHA K S Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 2. SRI SHANTHAMMA, W/O T SREENIVAS, AGED ABOUT 43 YEARS, 3. KUM. NAGARATHNA, D/O T.SREENIVAS, AGED ABOUT 22 YEARS, 4. SRI SHIVAKUMAR, S/O T SREENIVAS, AGED ABOUT 21 YEARS, RESPONDENTS NO.1 TO 4 ARE RESIDING AT MAVINAKATTE VILLAGE, KASABA HOBLI, KUNIGAL TALUK, TUMKUR DISTRICT-572 121 &RESPONDENTS (R1 TO R4 ARE SERVED V/O DATED 02.02.2018, R2 TO R4 ARE LR9S OF DECEASED R1) THIS RSA IS FILED U/S. 100 OF CPC., AGAINST THE JUDGEMENT & DECREE DTD:30.10.2014 PASSED IN R.A.NO.152/2011 ON THE FILE OF THE II ADDL. DISTRICT & SESSIONS JUDGE, TUMKUR, DISMISSING THE APPEAL AND CONFIRMING THE ORDER DATED 20.8.2011 PASSED IN O.S.NO.63/2005 ON THE FILE OF THE SENIOR CIVIL JUDGE & JMFC., KUNIGAL. THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI - 3 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 ORAL JUDGMENT This Regular Second Appeal is filed by the appellant challenging the judgment and decree dated 30.10.2014 passed in R.A.No.152/2011 by the learned II Additional District and Sessions Judge, Tumkur and the judgment and decree dated 20.08.2011 passed in OS No.63/2005 by the learned Senior Civil Judge and JMFC, Kunigal. 2. For convenience, the parties are referred to based on their ranking before the trial Court. The appellant was the plaintiff and the respondents were the defendants. 3. Brief facts, leading rise to the filing of this appeal are as follows: The plaintiff filed a suit against the defendants for recovery of money of ¹1,38,400. It is contended that defendants No.1 and 2, being a Husband and wife respectively, and on behalf of their minor children, defendant Nos.3 and 4, had jointly borrowed a sum of ¹1,00,000/- from the plaintiff and the plaintiff paid the - 4 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 loan amount through cheque bearing No.8218011 dated 1.8.2003 drawn on Canara Bank, Amruthur Branch, Kunigal Taluk. The loan was received for the legal necessity and thereby executed a registered mortgage deed dated 1.8.2003 by mortgaging the land bearing Sy.No.27/4B, 1 ¼ guntas with a constructed RCC building situated in Mavinakatte village, Kunigal taluk and it was agreed to pay the interest at the rate of 1.50% per month after a period of 6 months from the date of execution of above said deed. It is contended that the defendants have issued a legal notice dated 01.09.2005 by taking evasive stand and the plaintiff replied to the same through and reply notice dated 16.09.2005. However, the defendants did not repay the loan amount, after completion of 6 months. Hence, a cause of action arises for the plaintiff to file a suit for recovery of money. Accordingly, prays to decree the suit. 4. The defendants filed a written statement, admitting the transaction between the plaintiff and - 5 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 defendants and also the rate of interest, but the defendants have taken the defence that the plaintiff was not possessing a valid money lender license for lending the money. Hence, the suit filed by the plaintiff is not maintainable. Hence, on these grounds, prays to dismiss the suit. 5. The Trial Court based on the pleadings of the parties, framed the following issues; <1) Whether the defendants prove that the plaintiff is claiming exorbitant and excessive rate of interest at the rate of Rs. 1.50 Ps. P.m.? 2) Whether plaintiff is a habitual money lender and he is carrying money lending business by violating the mandatory provisions of Karnataka Money Lending Act? 3) Whether the suit is properly valued and court fee paid is insufficient? 4) Whether the defendants prove that the plaintiff has obtained 4 blank signed cheques bearing Nos.(1) 888383 (2) 888384 (3) 888385 and (4) 888387 for the security of the loan amount? 5) Whether the defendants prove that the plaintiff has created a new story to knock off the suit schedule property? - 6 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 6) Whether the plaintiff is entitled for the suit claim? 7) What order or decree?= 6. Issue No.2 was treated as a preliminary issue. The trial court recorded the evidence on preliminary issues i.e., defendants examined 2 witnesses as DW.1 and DW.2 and marked 39 documents as Exs.D1 to D39. On the other hand, in rebuttal, the plaintiff was examined as PW1 and marked one document as Ex.P.1. 7. After recording the evidence of the parties and hearing both sides, the Trial Court answered preliminary issue in the affirmative and consequently dismissed the suit of the plaintiff as barred under Section 11 of Karnataka Money Lenders Act, 1961. The plaintiff, aggrieved by the order on the preliminary issue dated 20.08.2011 passed in OS No.63/2005 preferred an appeal in RA No.152/2011 on the file of the learned II Additional District and Sessions Judge, Tumkur. The First Appellate - 7 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 Court, after hearing the learned counsel for the parties, framed the following points for consideration:- "1. Whether the application filed under Or.41 R.27 CPC deserves to be allowed? 2. Whether the appellant has made out substantial and reasonable grounds to interfere with the judgment and decree passed by the trial court? 3. What decree or order?" 8. The First Appellate Court, on reassessing the entire evidence on record, answered point Nos.1 and 2 in the negative and point No.3 as per the final order. The appeal was dismissed with costs. The order passed on the preliminary issue was confirmed vide judgment dated 30.10.2014. The plaintiff aggrieved by the order of preliminary issue and the judgment passed in R.A.No.152/2011, filed this appeal. 9. Heard the arguments of Miss.Tejaswini R., learned counsel for the plaintiff, she submits that the plaintiff is a money lender and has produced the money lending license before the First Appellate Court by filing an - 8 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 application for the production of additional evidence. The First Appellate Court rejected the said application without assigning proper reasons. Hence, prays to allow the appeal. 10. A Notice was issued on the defendants. Despite service of notice, none appeared for the respondents i.e., defendants and thus remained unrepresented. This court admitted the appeal, to consider the following substantial questions of law; "1) Whether the First Appellate Court committed an error in rejecting an application for production of additional evidence i.e., valid money lender licence obtained by the appellant wherein the Trial Court dismissed the suit solely on the ground that the plaintiff was not possessing valid money lender licence as on the date of institution of suit? 2) What order or decree?" 11. Regarding substantial question of law No.1: the plaintiff filed a suit against the defendants for recovery of money. It is a case of the plaintiff that the plaintiff had advanced a loan of ¹1,00,000 to defendant Nos.1 and 2 - 9 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 and the said loan was for family and legal necessity. Defendant Nos.1 and 2 executed a mortgage deed in favor of the plaintiff on 18.02.2003. It was agreed that the defendant would pay the interest at the rate of 1.5% per month. Despite the request made by the plaintiff, the defendant did not repay the loan amount. 12. The defendants filed a written statement admitting regarding loan transaction between the plaintiff and defendants and also execution of a registered mortgage deed in favour of the plaintiff. The defendants have taken a defence that the plaintiff is a money lender, and is not in possession of a valid effective money lender's license as required under the provisions of Karnataka Money Lender's Act, 1961. The Trial Court framed the issues and the issue No.2 was treated as a preliminary issue. The defendants have lead evidence, wherein they have examined 2 witnesses as DW.1 and DW.2. 13. The plaintiff, in rebuttal was also examined as PW1. The Trial Court has dismissed the suit only on the - 10 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 ground that the plaintiff was not possessing a valid money lending license as of the date of lending a money to defendant Nos.1 and 2. The plaintiff has produced and filed an application for the production of additional evidence in R.A.No.152/2011 along with the money lenders license, which discloses that the plaintiff was in possession of a money lending license and the said license was valid from 2.8.1999 to 31.3.2004. Admittedly, the transaction between the plaintiff and defendant is on 1.8.2003. On the date of advancing money to the defendant, the plaintiff had a valid money lending license. The First Appellate Court committed an error in rejecting an application for the production of additional evidence. The said additional documents go to the root of the case. Without considering said documents, the First Appellate Court committed an error in passing the impugned judgment. As observed above, the plaintiff was holding a valid money lender's license as of the date of advancing the money to the defendants. Thus, in view of the above - 11 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 discussion, the preliminary issue requires to be answered in negative. In view of the above discussion, I answer substantial question in the affirmative. Accordingly, I proceed to pass the following order; ORDER The appeal is allowed. The judgment and decree dated 30.10.2014 passed in R.A.No.152/2011 passed by the II Additional District and Sessions Judge, Tumkur and the Order on the preliminary issue passed in O.S.No.63/2005, by the Senior Civil Judge and JMFC, Kunigal dated 20.8.2011 are hereby set aside. The preliminary issue is answered in negative. Accordingly the suit in O.S.No.63/2005 is restored to its original file. - 12 - HC-KAR NC: 2025:KHC:21441 RSA No. 1660 of 2014 The Trial Court is directed to pass the judgment in accordance with law, after providing an opportunity to both parties to lead the evidence, and thereafter, pass the appropriate judgment. The office is directed to transmit the records to the Trial Court, forthwith. Sd/- (ASHOK S.KINAGI) JUDGE AKV List No.: 1 Sl No.: 11