- 1 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 28TH DAY OF JANUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM REGULAR FIRST APPEAL NO. 355 OF 2024 (MON) BETWEEN: 1. SRI. K. MURUGAN S/O SRI. KANDASWAMY AGED ABOUT 60 YEARS RESIDING AT SERKADU KUTT ROAD SERKADU POST (VIA), SLR AND T C VELLUR DISTRICT TAMIL NADU STATE-632 115. …APPELLANT (BY SRI. SURESH BABU .B.N, ADVOCATE) AND: 1. SRI. JAYARAJU S/O LATE CHINNAPPA AGED ABOUT 67 YEARS RESIDING AT NO. 12 COLLEGE ROAD, SRINIVASA LAYOUT SIR. M. VISVESWARAIAH EXTENSION HOSKAOTE BENGALURU RURAL DISTRICT-562 114. …RESPONDENT (BY SRI. H.T. NARAYAN, ADVOCATE) THIS RFA FILED UNDER SECTION 96 OF CPC, AGAINST THE JUDGMENT AND DECREE DATED 28.11.2019 PASSED IN OS.NO.6716/2017 ON THE FILE OF THE XV ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, BENGALURU, DECREEING THE SUIT FOR RECOVERY OF MONEY. Digitally signed by CHAITHRA A Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM ORAL JUDGMENT The captioned appeal is filed by the appellant - defendant assailing the money decree vide judgment and decree dated 28.11.2019 passed in O.S.No.6716/2017 on the file of the XV Additional City Civil and Sessions Judge at Bengaluru. 2. For the sake of brevity, the parties are referred to as per their rankings before the Trial Court. 3. Facts leading to the case are as under; The respondent–plaintiff instituted a suit for recovery contending that the defendant, being his close relative, had borrowed a sum of Rs.1,75,000/- on 17.07.2005 and a further sum of Rs.1,25,000/- on 10.11.2005 for business purposes. It is specifically pleaded that the said amounts were paid through two cheques, namely Cheque No.732917 dated 12.07.2005 for - 3 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 Rs.1,75,000/- and Cheque No.745270 dated 10.11.2005 for Rs.1,25,000/-, both drawn on Canara Bank. The plaintiff averred that reposing utmost confidence in the defendant owing to their close relationship, he advanced the aforesaid amounts out of his retirement benefits. It is further pleaded that though the defendant allegedly utilized the hand loan amounts for business and prospered, he failed to repay the loan together with interest as promised. It is the case of the plaintiff that, upon intervention of elders and well-wishers, a Memorandum of Understanding came to be executed on 19.01.2009 under which the defendant acknowledged liability to repay a total sum of Rs.3,00,000/- with interest. Despite the said understanding, the defendant allegedly failed to discharge the liability compelling the plaintiff to issue a legal notice dated 10.06.2010 demanding repayment of Rs.3,00,000/- together with interest at the rate of 3% per month. Hence, the suit came to be filed seeking recovery of money. - 4 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 4. Upon service of summons, the defendant entered appearance and filed a written statement vehemently denying the plaintiff’s claim. The defendant specifically contended that the suit is barred by limitation asserting that the alleged loan transactions pertain to the year 2005, whereas the suit was instituted only in the year 2017. The defendant categorically denied having borrowed any amount from the plaintiff and disputed the alleged transactions as well as the execution of the Memorandum of Understanding. On these grounds, dismissal of the suit was sought. 5. Based on the rival pleadings, the Trial Court framed appropriate issues. In order to substantiate his claim, the plaintiff examined himself and produced documentary evidence. The Memorandum of Understanding dated 19.01.2009 was marked as Ex.P.1. The plaintiff also relied upon the legal notice, postal acknowledgments, and bank account extracts, which were marked as Exs.P.2 to P.4. - 5 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 6. Though the defendant had seriously disputed the alleged hand loan transaction as well as the execution of the Memorandum of Understanding dated 19.01.2009, he did not choose to step into the witness box nor lead any rebuttal evidence. In the absence of any defence evidence, the Trial Court decreed the suit and directed the defendant to pay a sum of Rs.3,00,000/- with interest at the rate of 9% per annum from the date of suit till realization. 7. The learned counsel appearing for the defendant has advanced elaborate arguments both on the application seeking condonation of delay as well as on the merits of the case. 8. Drawing the attention of this Court to the Memorandum of Understanding dated 19.01.2009 marked at Ex.P.1, learned counsel for the defendant contended that the document itself contains endorsements on its reverse side evidencing payments made by the defendant in installments. It is specifically argued that there is a - 6 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 clear endorsement acknowledging receipt of Rs.1,95,000/- by the plaintiff. Learned counsel further submitted that the endorsements on the reverse side also contain details of payments, settlement and signatures of the parties, which clearly demonstrate that the entire hand loan stood discharged. It is contended that the Trial Court failed to advert to these crucial endorsements forming part of the very document relied upon by the plaintiff. According to the learned counsel, the plaintiff, in the light of these endorsements, had no subsisting cause of action and therefore, the decree passed by the Trial Court is perverse and contrary to the evidence on record, including the plaintiff’s own documents. 9. It is further argued that the transaction admittedly pertains to the year 2005 and that the suit instituted in the year 2017 is hopelessly barred by limitation. It is contended that this vital aspect has not been considered at all by the Trial Court. On this ground also, the findings recorded by the Trial Court are assailed as perverse, - 7 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 arbitrary and suffering from manifest error in appreciation of evidence. 10. The learned counsel for the defendant further contended that even assuming, without admitting that the plaintiff’s claim based on Ex.P.1 is accepted, the substantial payments reflected in the endorsements would estop the plaintiff from claiming the entire principal sum of Rs.3,00,000/- together with interest at 9% per annum. On this count as well, it is urged that the decree passed by the Trial Court warrants at least partial interference. 11. Per contra, learned counsel appearing for the plaintiff submitted that though the defendant disputed the plaintiff’s claim and the Memorandum of Understanding at the appellate stage, there is a clear admission of the execution of Ex.P.1, at least to the extent of the endorsements relied upon by the defendant himself. It is contended that once the Memorandum of Understanding is relied upon, even partially, the plaintiff is entitled to - 8 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 maintain the suit. Learned counsel further submitted that Ex.P.1 stipulates interest at the rate of 3% per month and therefore, the Trial Court having awarded interest only at 9% per annum has exercised restraint. On this ground, it is contended that the decree does not call for any interference. 12. Having heard the learned counsel appearing for both sides and upon perusal of the records, the following points arise for consideration: (i) Whether the finding of the Trial Court that the plaintiff is entitled to recover a sum of Rs.3,00,000/- with interest at the rate of 9% per annum from the date of suit till realization suffers from perversity and warrants interference by this Court? (ii) Whether the Trial Court erred in not considering the endorsements relating to payments made by the defendant, found on the reverse side of the Memorandum of Understanding marked at Ex.P.1 and whether - 9 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 the decree for Rs.3,00,000/- with interest at 9% per annum calls for interference on that ground? (iii) Whether the Trial Court committed an error in not dismissing the suit on the ground of limitation? (iv) Whether the delay of 734 days in filing the appeal, as sought to be condoned in I.A. No.1/2024, deserves to be condoned? (v) What order? Findings on Point No.(iv):- 13. Though there is an inordinate delay of 734 days in preferring the appeal and the reasons assigned in the affidavit filed in support of the application in I.A. No.1/2024 do not, by themselves, constitute wholly satisfactory or convincing explanation for the belated approach to this Court, this Court is nevertheless required to balance procedural rigour with the overarching obligation to render substantial justice. The right of appeal under Section 96 of the Code of Civil Procedure, 1908 is a - 10 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 valuable statutory right and denial of an opportunity to prosecute such appeal on technical grounds may, in a given case, result in grave prejudice. 14. This Court is also mindful of the fact that the decree under challenge saddles the defendant with a money liability carrying interest, which continues to accrue during the pendency of proceedings. The delay of 734 days, though inordinate, has not been shown to be deliberate or actuated by mala fides, and the plaintiff, on the other hand, is adequately compensated by way of interest on the decretal amount. Therefore, the prejudice, if any, caused to the plaintiff on account of delay is substantially mitigated. 15. In the facts and circumstances of the case, and having regard to the nature of the dispute and the substantial rights involved, this Court is of the considered view that ends of justice would be better served by affording an opportunity to the defendant to prosecute the - 11 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 appeal on merits rather than non-suiting him on the ground of limitation. Accordingly, this Court is inclined to exercise its discretionary jurisdiction and condone the delay. 16. Hence, I.A. No.1/2024 is allowed and the delay of 734 days in filing the appeal is condoned. Consequently, the appeal is taken up for consideration on merits. Point No.(iv) is answered in the Affirmative. Findings on Point Nos. (i) and (ii) :- 17. The plaintiff’s claim for recovery is founded primarily on the Memorandum of Understanding dated 19.01.2009, which is marked in evidence as Ex.P.1. The entire edifice of the plaintiff’s case rests upon the recitals and terms contained in the said document, including the alleged acknowledgment of liability and the stipulation regarding repayment of the loan amount with interest. - 12 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 18. Before proceeding to examine the rival contentions and the correctness of the findings recorded by the Trial Court, this Court deems it appropriate to extract the relevant clause of the Memorandum of Understanding, which forms the crux of the dispute between the parties and has a direct bearing on the issues relating to liability, discharge and quantum of the amount recoverable. Relevant extract is as under: "WHEREAS PARTY TO THE SECOND PART has barrowed an amount of Rs.3,00,000.00/- (Rupees Three Lakhs Only by cheque No.732917 dated 12.07.2005 for Rs.1,75,000.00/- and by cheque No.745270 dated 10.11.2005 for Rs.1,25,000.00/-) from Party to the First part for his personnel purposes and promised to the First part to repay the said amount with interest @ 36% per annum whenever the Party to the First Part demands either in person or through his agent immediately without putting any reason for delay." - 13 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 19. On a careful reading of the extracted clause of the Memorandum of Understanding dated 19.01.2009 marked at Ex.P.1, this Court finds that the plaintiff has succeeded in substantiating the foundational fact that he had advanced a hand loan aggregating to Rs.3,00,000/- to the defendant. The document clearly evidences that the said amount was paid under two cheques, namely, Cheque No.732917 dated 12.07.2005 for a sum of Rs.1,75,000/- and Cheque No.745270 dated 10.11.2005 for a sum of Rs.1,25,000/-, both drawn on Canara Bank. The recitals in Ex.P.1 unmistakably establish that the said amounts were advanced by the plaintiff to the defendant for business purposes. To that extent, the plaintiff has successfully proved the lending of a total sum of Rs.3,00,000/-. 20. However, it is equally significant to note that the plaintiff has placed heavy reliance on the very same document marked at Ex.P.1 to substantiate his claim. Once the plaintiff relies upon a document as the foundation of his suit, he cannot be permitted to - 14 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 approbate and reprobate by accepting one part of the document while disputing or ignoring the other part. The endorsements found on the reverse side of the Memorandum of Understanding form an integral part of the same document and cannot be brushed aside. 21. A perusal of the endorsements made on the back side of Ex.P.1 clearly indicates that the defendant has made payments in cash on several occasions. Though the exact dates of such payments are not specified, the document records eight distinct payments aggregating to a sum of Rs.1,95,000/-. The acknowledgment of receipt of the said amount by the plaintiff is evident from the endorsements themselves. What is even more crucial is that the balance amount payable is also specifically mentioned on the reverse side of the document, which is Rs.1,05,000/-. 22. In the light of these clear and unequivocal endorsements acknowledging receipt of substantial - 15 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 payments, this Court is of the considered view that the plaintiff is clearly estopped from claiming the entire sum of Rs.3,00,000/- as the suit claim. Having acknowledged receipt of Rs.1,95,000/- under the very document on which the suit is founded, the plaintiff could not have instituted the suit seeking recovery of the full principal amount, contrary to his own admissions recorded in Ex.P.1. 23. Therefore, upon a holistic appreciation of Ex.P.1 and the endorsements contained therein, this Court holds that at the time of institution of the suit, the plaintiff ought to have restricted his claim to the balance sum of Rs.1,05,000/- together with applicable interest. The claim for recovery of Rs.3,00,000/- was clearly unsustainable and contrary to the documentary evidence relied upon by the plaintiff himself. 24. Even if the payments made by the defendant are excluded for the sake of argument, the material on record - 16 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 unmistakably demonstrates that there was still a subsisting balance payable by the defendant. However, the suit claim for recovery of Rs.3,00,000/- was not maintainable in law. The plaintiff, having acknowledged payments to the tune of Rs.1,95,000/-, is clearly estopped from asserting a claim in excess of Rs.1,05,000/-. 25. Having regard to the pleadings, the nature of transaction and the fact that the loan was admittedly advanced for business purposes and further bearing in mind that the defendant has failed to lead any rebuttal evidence, this Court is of the view that the plaintiff is entitled to recover the balance sum of Rs.1,05,000/- together with interest at the rate of 9% per annum from the date of suit till realization. 26. The Trial Court, however, has failed to advert to this crucial aspect of the matter and has not properly appreciated Ex.P.1 in its entirety, particularly the endorsements evidencing substantial payments made by - 17 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 the defendant. At the same time, the contention of the defendant that the entire loan amount has been discharged cannot be accepted, as there is no endorsement on the reverse side of Ex.P.1 indicating full and final settlement of the entire loan. Therefore, the defendant’s plea of complete discharge also cannot be sustained. 27. Accordingly, this Court holds that the decree passed by the Trial Court warrants partial interference. Point Nos.(i) and (ii) are answered partly in the affirmative, holding that the plaintiff has succeeded in establishing that notwithstanding the payments made by the defendant, a balance sum of Rs.1,05,000/- remained due and recoverable. 28. If interest at the rate of 9% per annum is calculated on the said amount from the date of suit till this date, the accrued interest works out to Rs.78,603/-. Consequently, the plaintiff is entitled to a total sum of - 18 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 Rs.1,83,603/- (Rs.1,05,000/- + Rs.78,603/-) with future interest at the rate of 12% per annum from today till realization. Findings on Point No.(iii) :- 29. The plea of limitation is a mixed question of law and fact. Though the defendant has raised the plea that the suit is barred by limitation, the burden squarely lay on the defendant to substantiate the same by stepping into the witness box and placing cogent material to demonstrate as to how the claim was time-barred. 30. The defendant, despite disputing the transaction and raising the plea of limitation, has chosen not to enter the witness box. In the absence of any oral or documentary evidence in support of the plea of limitation, this Court is of the view that the defendant has failed to discharge the burden cast upon him. Consequently, this Court finds no reason to interfere with the findings - 19 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 recorded by the Trial Court on the issue of limitation. Accordingly, Point No.(iii) is answered in the Negative. 31. Point No.(v):- For the foregoing reasons, this court proceeds to pass the following; ORDER (i) The appeal is allowed in part. (ii) The judgment and decree dated 28.11.2019 passed by the Trial Court in O.S.No.6716/2017 are hereby modified in part. (iii) The suit is decreed with costs for a sum of Rs.1,05,000/- (Rupees One Lakh Five Thousand only) together with interest at the rate of 9% per annum from the date of institution of the suit till this date, which works out to Rs.78,603/-. Accordingly, the plaintiff is entitled to recover a total sum of Rs.1,83,603/- (Rupees One Lakh Eighty-Three Thousand Six Hundred and Three only) with future interest at the rate of 12% per annum from today till realization. - 20 - HC-KAR NC: 2026:KHC:4475 RFA No. 355 of 2024 (iv)Draw Decree accordingly. SD/- (SACHIN SHANKAR MAGADUM) JUDGE NBM List No.: 1 Sl No.: 7