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Synopsis

Based on details furnished by an ex-MLA in his affidavit filed before the Election Commission of India (EC) during the 2011 Assembly election, the Madras High Court ordered him to settle a loan of Rs 6.25 crore, that he had taken from a businessman, with interest at the rate of 18% per annum from 2013.

The bench of Justice G Jayachandran and Justice CV Karthikeyan said, "The affidavit before Election Commission may not have evidentiary value but will have to be taken as a statement of fact and as a declaration of existing liability".

The order was passed in a plea filed by the Official Assignee, High Court, Madras, seeking a Judgment and Decree against M.Karthe, who had contested as a Pattali Makkal Katchi (PMK) candidate in the Edappadi Assembly constituency in 2011, to pay a sum of Rs 9 Crore together with interest at 18% p.a from 2013 till date of realization with costs.

The issue pertained to the declaration of insolvency of businessman, Arjunlal Sunderdas (since dead). On an application filed by one of his creditors, he had been declared insolvent by the high court in 2014. When the Official Assignee was handed over a list of insolvent's debtors and creditors, it was discovered that M Karthe and his wife had received Rs 9 crores in total from Sunderdas in different tranches.

Accordingly, the Official Assignee filed a plea before the high court in 2017, seeking repayment of the money taken by M Karthe and his wife. 

Notably, to prove the liability of M Karthe and his wife, the Official Assignee relied upon Karthe's own admission in the 2011 election affidavit that he had taken a loan of Rs 6.25 crore from Sunderdas.

Opposing such repayment, M Karthe argued before the high court that the election affidavit would have no evidential value.

The division bench said, "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".

While holding that this fact gave a further statutory right to the Official Assignee to claim the debt, the court also observed that the application of the Official Assignee was maintainable and within the period of limitation.

However, while highlighting that Karthe owed only Rs 6.25 crore and the rest Rs 2.75 crore were due from his wife, the division bench held that the mere declaration in the affidavit filed by Karthe before the Election Commission could never bind his wife. 

"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," court said. 

Accordingly, while partly allowing the present application, court passed a decree 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.

Case Title: The Official Assignee Vs Arjunlal Sunderdas And Another