Contract Law Case: Sabur Devi Yadavni and Others v. Kesharwati Yadavni , NKP, (2046), P. 235, DN: 3743
Case: Fraud in Loan Transaction (Forgery of Loan Deed/Lenden Jalsaji)
Plaintiff: Sabur Devi Yadavni and Others
Defendant: Kesharwati Yadavni (Widow of the deceased Bhagirath Yadav)
Decision No: 3743
This case is related with Forgery and Burden of prove.
Facts of the Case:
Sabur Devi claimed that Bhagirath Yadav, the deceased husband of Kesharwati Yadavni, borrowed Rs. 52,201/- from her on 2 Baisakh 2038 B.S. According to plaintiff, Bhagirath signed a loan deed promising to repay the principal and interest by the end of Poush 2038 B.S. Before repaying the loan, Bhagirath died on 12 Shrawan 2039 B.S. Plaintiff demanded repayment from Bhagirath’s widow, Kesharwati, but she refused. Therefore, plaintiff filed a suit seeking recovery of the principal amount, interest, and future interest. Defendant denied that her husband had ever borrowed money from plaintiff. She admitted that the thumb impression on the document belonged to Bhagirath but argued that he was seriously ill, elderly, and was deceived into putting his thumb impression on a document that was presented as a power of attorney for repaying bank loans. She claimed the loan deed was fraudulently prepared while her husband was near death and lacked proper understanding. She therefore requested the court to declare the deed fraudulent and dismiss plaintiff’s claim.
Plaintiff’s Claim:
Plaintiff argued that, Bhagirath Yadav legally borrowed Rs. 52,201/-. He voluntarily executed the loan deed. He died before repaying the debt. As his legal heir, Kesharwati Yadavni was liable to repay the outstanding principal and interest. The court should order recovery of the entire amount from defendant.
Defendant’s Arguments:
Defendant argued that, Bhagirath never borrowed any money from plaintiff. No real loan transaction ever took place. Bhagirath was old, seriously ill, and close to death. His thumb impression was obtained by deception. The document was falsely prepared as a loan deed. Therefore, the deed was fraudulent and unenforceable.
Legal Issue:
- Whether the loan deed represented a genuine loan transaction or was a fraudulent document created without any actual lending of money?
- Does a thumb impression alone prove that a genuine loan transaction took place?
Decisions of the Courts:
Siraha District Court:
District Court found that no genuine loan transaction had taken place and held that the loan deed was fraudulent. So, court dismissed plaintiff’s claim for recovery of money.
Eastern Regional Court:
Regional Court upheld District Court’s decision rejecting the money claim and held that the plaintiff failed to prove an actual loan transaction. Confirmed that certain persons involved in preparing the document had committed fraud.
Supreme Court:
Supreme Court dismissed plaintiff’s appeal and upheld the decision of Eastern Regional Court. The Court held that, although Bhagirath’s thumb impression appeared on the document, the evidence did not prove that any money had actually been lent. Since there was no real loan transaction, plaintiff could not recover the claimed amount. A document falsely showing a loan when no loan actually existed constituted fraud. The findings that Sabur Devi Yadavni, Thakai Yadav, and Ramnarayan Yadav participated in the fraudulent preparation of the document were upheld. The appeal was dismissed, and the fines imposed on the persons found responsible for the fraud remained in force.
Established Principles:
- A genuine signature or thumb impression alone does not prove a valid loan transaction.
- The lender must prove that money was actually advanced.
- A loan deed executed without any real loan is not legally enforceable.
- Preparing a loan document without an actual loan amounts to fraud (forgery).
- Courts must examine the surrounding circumstances, not merely the written document.
- The burden lies on the plaintiff to prove the existence of the actual transaction.
