A Madras High Court Bench of Justice Dr G Jayachandran and Justice CV Karthikeyan has ordered an ex-MLA to settle a loan of Rs. 6.25 crores taken from a businessman with interest as the rate of 18% per annum from 2013, based on the details furnished in his affidavit before the Election Commission during the 2011 Assembly Election.

Counsel K.V.Ananthakrushnan appeared for the applicant and Counsel P.B. Sampath Kumar appeared for the second respondent.

In this case, the Official Assignee of the High Court in Madras filed an application seeking a judgment and decree against the second respondent, M. Karthe, for the payment of Rs. 9,00,00,000 along with 18% interest from 30.04.2013, based on the assets of an adjudicated insolvent, Arjunlal Sunderdas. The Official Assignee claimed that the second respondent had received this amount from the insolvent and had declared this debt in an affidavit filed before the Election Commission. The second respondent denied these claims, stating that the Official Assignee lacked an actionable claim and that the election affidavit had no evidentiary value.

On hearing the parties, the High Court observed that, "The affidavit filed before the Election Commission even though it is a declaration of a liability, we hold it as a statement of fact made by the second respondent".

Subsequently, the Court held that the observation was a further statutory right to the Official Assignee to claim the debt, while also holding that the plea was maintainable and within the period of limitation. In that vein, it was said that, "since it is held that she is not liable for any claim, the issue of non joinder becomes redundant and since the claim is also severable, we hold that the application is maintainable and not bad for non joinder of Tmt.K.Shanthi, wife of the second respondent. The first issue is answered accordingly. With respect to the third issue, we hold that the application is barred by law of limitation so far as the claim against Tmt.K.Shanthi, wife of the second respondent is concerned. Thus the issues answered accordingly."

Further, the Court clarified that, "In so far as his wife is concerned, there is no document to show the date of borrowal, whether there are any further transactions and whether it had been discharged after the affidavit had been filed before the Election Commission,".

The appeal was allowed in part, with the Court directing Karthe to pay a sum of Rs.6.25 together with interest from 30.04.2013 till the date of realisation together with costs of the recovery proceedings. In that context, it was said that, "In the result the application is partly allowed and a decree is passed directing the second respondent to pay a sum of Rs.6.25/- crores together with interest would be 18% since no contra evidence had been produced that the borrowal was not for commercial transaction. Therefore, we would uphold interest at 18% p.a. The issues are answered accordingly."

Cause Title: The Official Assignee v. Arjunlal Sunderdas And Another

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Madras High CourtJustice G. JayachandranJustice CV KarthikeyanElection CommissionEvidentiary Value

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