THE HON'BLE SRI JUSTICE SUBBA REDDY SATTI
SECOND APPEAL No.334 of 2022
JUDGMENT:
Defendants in O.S.No.293 of 2012 filed the present second appeal, against the judgment and decree dated 30.11.2021 in A.S.No.8 of 2017 on the file of Principal District Judge, West Godavari at Eluru, confirming the judgment and decree dated 08.07.2016 in O.S.No.293 of 2012 on the file of Additional Senior Civil Judge, Eluru.
2. For the sake of convenience and brevity, the parties to this judgement are referred to as they are arrayed in the O.S.No.293 of 2012.
3. Respondent, being the plaintiff filed the suit O.S.No.293 of 2012 on the file of Additional Senior Civil Judge, Eluru for recovery of amount basing on promissory note.
4. The case of the plaintiff, in brief, is that defendants approached the plaintiff in the year 2009 for financial help for higher studies of 3rd defendant and borrowed an amount of Rs.7,00,000/- on 11.08.2009 and executed the suit promissory note. They also agreed to repay the amount with interest @ 24% p.a. Since the defendants failed to repay the amount, plaintiff got issued a legal notice dated 23.07.2012 and filed the suit for recovery of amount.
5. Defendants filed written statement and denied the averments in the plaint. Defendants contended interalia that 2 the suit promissory note is fabricated and is not supported by consideration. They further contended that they obtained educational loan from the Andhra Bank, R.R.Peta Branch, Eluru in 2009 for higher studies of 3rd defendant at U.S.A and the plaintiff stood as a guarantor for the said loan. At that point of time, he obtained signature of defendants on blank concurrent papers and stamp papers and filed the above suit.
6. Basing on the above pleadings, the trial Court framed the following issues:
(1) Whether the suit promissory note is true, valid and duly executed by the defendants?
(2) To what relief?
7. During the course of trial, plaintiff examined himself as P.W.1 and got examined P.Ws.2 to 4. Exs.A-1 to A-4 were marked. On behalf of defendants, 1st defendant examined herself as D.W.1 and Exs.B-1 to B-3 were marked.
8. Trial Court on consideration of both oral and documentary evidence, decreed the suit against defendants 1 to 3 for an amount of Rs.9,47,800/- with costs and subsequent interest on principal amount @ 12% p.a. from the date of suit till the date of decree and thereafter @ 6% p.a. till realization.
9. Aggrieved by the same, defendants filed appeal A.S.No.8 of 2017 on the file of Principal District Judge, Eluru. The first appellate Court being the final factfinding Court, on consideration of oral and documentary evidence, dismissed the 3 appeal vide judgment dated 30.11.2021. Assailing the same, the present second appeal is filed.
10. Heard Mrs.Nimmagadda Revathi, learned counsel for the appellants/defendants.
11. Learned counsel for appellants would submit that the Courts below failed to consider that respondent/plaintiff has no capacity to lend the loan amount. She also would submit that Ex.A-1 is a fabricated document and the respondent/plaintiff failed to prove the execution of Ex.A-1. She also would submit that the plaintiff stood as a guarantor for the educational loan availed by defendants and at that point of time, he obtained their signatures on blank stamp papers as security and with those papers, he concocted Ex.A-1. She would submit that the first appellate Court ought to have allowed I.A.No.339 of 2021 filed under Order 41 Rule 27 of CPC and she thus, prayed to allow the second appeal by setting aside the judgments of Courts below.
12. Going by the pleadings and evidence, the case of the plaintiff is that defendants approached him in 2009 for financial help for the purpose of higher studies of 3rd defendant and obtained loan of Rs.7,00,000/- agreeing to repay the same with interest @ 24% p.a. and executed the promissory note on the same day, however, defendants failed to discharge the amount and hence, he issued Ex.A-2 legal notice dated 23.07.2012 demanding and eventually filed the suit.
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13. On the other hand, defendants contended that they obtained educational loan from the Andhra Bank, R.R.Peta Branch, Eluru for higher studies of 3rd defendant at U.S.A and plaintiff stood as a guarantor and at the time of borrowing amount, as the plaintiff demanded, the defendants subscribed their signatures on blank stamp papers. Taking advantage of the papers containing the signatures of defendant, plaintiff filed the suit.
14. Basing on the pleadings, the following substantial questions of law arise for consideration:
(1) Whether the judgments of Courts below are vitiated in not considering that plaintiff has no capacity to lend the amount?
(2) Whether the findings recorded by the Courts are perverse warranting interference under Section 100 of CPC?
15. Scope of Sec 100 CPC, the Hon'ble Apex Court in Hero Vinoth Vs. Seshammal1, held that:
"19. It is not within the domain of the High Court to investigate the grounds on which the findings were arrived at, by the last court of fact, being the first appellate court. It is true that the lower appellate court should not ordinarily reject witnesses accepted by the trial court in respect of credibility but even where it has rejected the witnesses accepted by the trial court, the same is no ground for interference in second appeal when it is found that the appellate court has given satisfactory reasons for doing so. In a case where from a 1 AIR 2009 SC 1481 5 given set of circumstances two inferences of fact are possible, one drawn by the lower appellate court will not be interfered by the High Court in second appeal. Adopting any other approach is not permissible. The High Court will, however, interfere where it is found that the conclusions drawn by the lower appellate court were erroneous being contrary to the mandatory provisions of law applicable or its settled position on the basis of pronouncements made by the Apex Court, or was based upon inadmissible evidence or arrived at by ignoring material evidence.
It was furthermore held:
23. To be "substantial" a question of law must be debatable, not previously settled by law of the land or a binding precedent, and must have a material bearing on the decision of the case, if answered either way, insofar as the rights of the parties before it are concerned. To be a question of law "involving in the case" there must be first a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a substantial one and involved in the case, or not; the paramount overall consideration being the need for striking a judicious balance between the indispensable obligation to do justice at all stages and impelling necessity of avoiding prolongation in the life of any lis. (See Santosh Hazari v. Purushottam Tiwari MANU/SC/0091/2001).
24. The principles relating to Section 100 CPC, relevant for this case, may be summerized thus:-
(i) ...6
(ii) The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law having a material bearing on the decision of the case (that is, a question, answer to which affects the rights of parties to the suit) will be a substantial question of law, if it is not covered by any specific provisions of law or settled legal principle emerging from binding precedents, and, involves a debatable legal issue. A substantial question of law will also arise in a contrary situation, where the legal position is clear, either on account of express provisions of law or binding precedents, but the court below has decided the matter, either ignoring or acting contrary to such legal principle. In the second type of cases, the substantial question of law arises not because the law is still debatable, but because the decision rendered on a material question, violates the settled position of law."
16. The defendants in the written statement admitted execution of Ex.A-1. Hence, burden lies on the defendants to prove that Ex.A-1 promissory note was executed under the circumstances pleaded by them in the written statement. Defendants must lead evidence rebutting presumption under Sec 118(a) of N.I. Act available in favour of the plaintiff.
17. In Bharat Barrel and Drum Manufacturing Company Vs. Amin Chand Payrelal2, the Hon'ble Apex Court was held thus:
"Once execution of the promissory note is admitted, the presumption under Section 118(a) would arise that it is supported by consideration. Such a presumption is rebuttable. The defendant can prove the non- existence of consideration by raising a probable defence. If the defendant is proved to have discharged the initial onus of 2 (1999) 3 SCC 35 7 proof showing that the existence of consideration was improbable or doubtful or the same was illegal, the onus would shift to the plaintiff who will be obliged to prove it as a matter of fact and upon its failure to prove would disentitle him to the grant of relief on the basis of the negotiable instrument. The burden upon the defendant of proving the non-existence of the consideration can be either direct or by bringing on record the preponderance of probabilities by reference to the circumstances upon which he relies. In such an event the plaintiff is entitled under law to rely upon all the evidence led in the case including that of the plaintiff as well. In case, where the defendant fails to discharge the initial onus of proof by showing the non-existence of the consideration, the plaintiff would invariably be held entitled to the benefit of presumption arising under Section 118(a) in his favour. The court may not insist upon the defendant to disprove the existence of consideration by leading direct evidence as existence of negative evidence is neither possible nor contemplated and even if led is to be seen with a doubt. The bare denial of the passing of the consideration apparently does not appear to be any defence. Something which is probable has to be brought on record for getting the benefit of shifting the onus of proving to the plaintiff. To disprove the presumption the defendant has to bring on record such facts and circumstances, upon consideration of which the court may either believe that the consideration did not exist or its non-existence was so probable that a prudent man would, under the circumstances of the case, shall act upon the plea that it did not exist."
18. In G.Venkata Rama Subbaiah Vs. D.Rasool Naik3, the composite High Court of Andhra Pradesh held thus:
"Once the execution of the promissory note is admitted or proved, then it is presumed to be supported by consideration unless contrary is proved. The burden is 3 2003 (4) ALT 414 8 on the defendant to rebut the same by adducing convincing evidence. Unless the defendant rebuts the presumption by adducing convincing rebuttal evidence, the evidential burden would not shift back to the plaintiff who has legal burden only after adducing such convincing rebuttal evidence, it can be held that thereafter the presumption under Section 118 does not come to the rescue of the plaintiff."
19. Going by the pleadings in the case and evidence, there is no dispute that plaintiff's mother and 1st defendant are sisters and defendants 2 and 3 are sons of 1st defendant. It is also admitted fact that defendants obtained educational loan from Andhra Bank, R.R.Peta Branch, Eluru, for which plaintiff stood as a surety being the Government employee. The contention of defendants is that at the time when the plaintiff stood as a surety, he obtained their signatures on blank stamp papers, however, the plaintiff denied the said allegation. Since the defendants admitted execution of promissory note, the burden lies on them to disprove the same.
20. The initial burden lies on the plaintiff to establish the execution of suit promissory note. Plaintiff examined himself as P.W.1 and examined the attestors and scribe as P.Ws.2 to 4. P.Ws.1 to 4 categorically deposed about borrowal of amount by defendants on 11.08.2009 and execution of Ex.A-1 promissory note. The evidence of P.Ws.1 to 4 is consistent. In the absence of any evidence by defendants rebutting the evidence with regard to execution of Ex.A-1 or passing of consideration, in the light of evidence let in by the plaintiff, the presumption under 9 Section 118A of the N.I.Act comes into operation and thus, plaintiff, infact, proved the execution of Ex.A-1 by defendants and passing of consideration.
21. D.W.1 filed her account statement of Andhra Bank from 01.01.2008 to 08.12.2008, however, the suit transaction took place on 11.08.2009. As per Ex.B-2, balance in the account of D.W.1 as on 03.12.2008 is Rs.4,000/-. The bank statement of ICICI Bank, which was marked as Ex.B-4 also does not support the case of defendants. Thus the evidence let by the defendants belies the plea of defendants regarding their having sufficient money. The other plea of the defendants is that scribe and attestors are close relation and friends of plaintiff and hence their evidence is to be disbelieved.
22. In Kurakula Apparao Vs. Varrey Vijaya Lakshmi4, the Composite High Court of Andhra Pradesh held thus:
"There is no law that evidence of a close relative has to be disbelieved on the ground that he is closely related to the plaintiff. At best, their evidence has to be appreciated carefully and cautiously. After appreciation of the evidence, if their evidence stands in the category of wholly reliable, then there is no reason to discard their evidence."
23. In the case on hand, merely because P.Ws.2 and 3 are related to P.W.1, their evidence cannot be totally discarded. In fact, going by the relationship, plaintiff and defendants are closely related to each other. In fact evidence of P.W.2 and 4 Appeal Suit No.47 of 2006 dated 29.03.2011 10 P.W.3 is consistent and nothing contra was elicited during their cross examination.
24. Pending the appeal suit, defendants filed I.A.No.339 of 2021 under Order 41 Rule 27 of CPC and the same was considered by the first appellate Court along with appeal. The first appellate Court came to the conclusion that appellants failed to satisfy the ingredients of Order 41 Rule 27 of CPC and accordingly, dismissed the I.A.No.339 of 2021.
25. The findings of the fact recorded by the Courts below are based on appreciation of both oral and documentary evidence. Unless, the defendants satisfies that substantial question of law involved in the second appeal, interference of this Court with the judgments rendered by the Courts below in exercise of jurisdiction under Section 100 of CPC is not warranted. No questions of law much less substantial questions of law arose in the appeal. Hence, the second appeal is liable to be dismissed, however, without costs.
26. Accordingly, the second appeal is dismissed at admission stage. No order as to costs.
As a sequel, all the pending miscellaneous applications shall stand closed.
_________________________ SUBBA REDDY SATTI, J 11th August, 2022 PVD