SHIVASHANKAR BHAT,J. - (1.) THE appeal is by the plaintiffs. According to the plaint the plaintiffs are dealing in metal scraps among other goods and the two plaintiffs are having common partners. The transactions in question are common as against the defendants -1 and 2 and consequently the suit is filed invoking Order l, Rule 1 of Code of Civil Procedure.
(2.) THE first defendant started a metal rolling mill at Bangalore. The second defendant is a trader in metal scraps. The plaintiffs and second defendant had several business transactions. Financial accommodation was also being provided between them in the matter of providing stock and arranging finances. According to the plaintiffs, the first defendant issued two cheques dated 16 -4 -1981, one for Rs.20,000/ - and another for Rs.52,041/ - in favour of the second defendant. These cheques were endorsed by the second defendant in favour of the plaintiffs for valuable consideration, the consideration being the adjustment of the amounts due from the second defendant to the plaintiffs under the respective accounts. However, when the plaintiffs presented these cheques, they were returned by the Bank. According to the plaintiffs they are the holders in due course and therefore entitled to claim the amounts payable under the two cheques. One cheque for Rs. 52,041/ -was endorsed in favour of the first plaintiff and the other cheque for Rs. 20,000/ - was endorsed in favour of the second plaintiff. The plaint also states that the second defendant had sold brass sheet cutting scrap to the first defendant, value of which was Rs. 72,041/ -. The two cheques were issued by the first defendant towards this amount representing the value of the scrap purchased by the first defendant from the second defendant. It is unnecessary to refer to other statements in the plaint for the purpose of this appeal. The suit claim is Rs. 1,00,000/ -inclusive of the interest up to the date of the suit. The plaintiffs claim current and future interest also at 18% per annum. The first defendant stated that he was not aware of the status of the plaintiffs as trading firms. The plaintiffs were called upon to prove strictly the averments regarding the alleged financial accommodation between the plaintiffs and the second defendant. According to the first defendant the first defendant never purchased anything from the second defendant valued at Rs. 72,041/ - and no cheques were issued by the first defendant. The first defendant had a manager by name Shanmugam. He was in possession of cheque leaves left with him by the first defendant duly signed by the first defendant. These cheques were left with the manager "for the purposes of office establishment". However, the said Shanmugam misused the cheques. There were series of fraudulent transactions carried out by the said manager; since the cheques were not genuine and were not issued by a competent person, the first defendant denied any liability thereunder. The first defendant also did not admit that the plaintiffs are the purchasers for valuable consideration of the alleged cheques. The alleged adjustment between the plaintiffs and the second defendant were also denied. The first defendant asserts that the suit was filed in collusion with the second defendant.
(3.) THE second defendant asserted that he obtained the two cheques from the first defendant in consideration of the supply of metal scraps. The second defendant pointed out that there were other sale transactions under which the first defendant purchased another quantity of metal scraps and issued a cheque for Rs. 66,821 / - dated 25 -2 -1981. The suit cheques were with reference to invoice No. 229 while the cheque dated 25 -2 -1981 for another sum of Rs.66,821/ - was with reference to invoice No. 230. The second defendant endorsed the two cheques connected with invoice No. 229 in favour of the plaintiffs for valuable consideration and consequently the plaintiffs were the holders in due course. However, the second defendant denied any liability to meet the claim of the plaintiffs since the accounts have been settled between them.;