The Delhi High Court has directed a street food vendor to repay Rs 2.6 lakh to a lender, rejecting his claim that he was “illiterate” and did not understand the settlement agreement he had signed.
Ruling in favour of the lender, Justice Neena Bansal Krishna said the vendor’s own conduct showed that the agreement was valid. The court noted that the vendor had already acted on the settlement by paying six instalments, which contradicted his claim that it was involuntary or based on a smaller loan of Rs 20,000.
Court rejects illiteracy claim, cites conduct
“The plea of the defendant (vendor) that he was illiterate and that the settlement was involuntary cannot be countenanced. If the settlement was truly coercive, there was no reason for the defendant to have acted upon it by paying six consecutive instalments of Rs 10,000 each, spread over a period of nearly seven months, instead of lodging a protest or issuing a notice to the plaintiff (man),” the order read.
The court said the vendor’s claim that he had taken only Rs 20,000 was inconsistent with his actions. It observed that there was “no reason” for him to issue a cheque of Rs 3.20 lakh if the loan was only Rs 20,000.
It also held that written documents carry more weight than oral claims. The court found that both the trial court and the appellate court had ignored this legal principle, calling it a “serious illegality.”
Documents support lender’s case
The court said the settlement agreement clearly mentioned the loan amount, repayment terms, instalments and consequences of default, and it carried the vendor’s admitted signatures.
It added that the vendor’s attempt to contradict the written agreement through oral claims was “impermissible” in law. While the lender’s case was supported by documents such as the cheque, return memo, legal notice and settlement, the vendor’s claims were described as “bald assertions” without any proof.
The court also noted that the vendor stopped payments after six instalments without any valid reason, thereby breaching the agreement. It ruled that the lender is entitled to recover Rs 2.60 lakh.
Background of the dispute
The case arose from a loan of Rs 3.20 lakh given by Kishan Kumar Gupta to the vendor, Raj Kumar, on September 15, 2013. The vendor had said he needed money due to financial stress, including buying a house in 2011 and his son’s marriage. He had promised to repay the amount within a year with 18% annual interest.
When the amount was not repaid, the vendor issued a cheque dated October 21, 2014, for Rs 3.20 lakh. However, when the cheque was presented on January 16, 2015, it was dishonoured with the remark “accounts closed.” A legal notice was then sent in February 2015.
Later, with the help of common friends, both parties reached a settlement on March 16, 2015. The vendor agreed to pay Rs 1 lakh in instalments, with a clause stating that failure to pay two consecutive instalments would allow the lender to claim the full loan amount.
The vendor paid six instalments of Rs 10,000 each between March and October 2015, totalling Rs 60,000, but stopped payments after that.
Vendor’s defence and court’s findings
The vendor told the court that he was educated only up to Class 2 and earned his livelihood by selling chole kulche on a cart in Chawri Bazar. He claimed he had taken only Rs 20,000 as a loan and had issued a blank signed cheque under pressure.
He also alleged that the lender was an unlicensed moneylender who had cheated him and filed the case to harass him. However, the court rejected these claims, noting that they were not supported by any evidence. It concluded that the written agreement and the vendor’s actions clearly proved the lender’s case.