THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO
APPEAL SUIT No.297 OF 2013
JUDGMENT:
1. The Appeal, under Section 96 of the Code of the Civil Procedure, is filed by the appellants/defendants challenging the decree and Judgment dated 05.12.2012 in O.S.No.96 of 2004 passed by the learned Senior Civil Judge, Bapatla (for short, 'the trial court'). The respondent herein is the plaintiff, who filed the suit in O.S. No.96 of 2004 for recovery of Rs.3,76,573/- from the defendants with costs and interest based on the two promissory notes.
2. For the sake of convenience, hereinafter, the parties are arrayed as per their respective litigative status before the trial Court.
3. The plaintiff's case is that the 1st defendant borrowed Rs.67,000/- from him on 24.02.2003 for his business purpose and executed a promissory note in favour of the plaintiff, agreeing to repay the same with interest at 24% per annum. Again, on 28.03.2003, the 1st defendant borrowed Rs.2,14,000/- from the plaintiff and executed another promissory note in favour of the plaintiff, agreeing to repay the same with interest at 24% per annum. It is stated in the plaint that the defendant is an Income Tax Assessee; as such, the interest on the debts need not be scaled down under Act IV of 1938. Despite repeated demands by the plaintiff, the 1st defendant did not repay the amount and postpone the same on one pretext or the other. It is further stated that during the pendency of the suit, the 1st defendant 2 TMR, J A.S.No.297 of 2013 died intestate, leaving behind the defendants 2 to 4 as his legal heirs, and they are in possession and enjoyment of the deceased's estate. Hence, he was constrained to file the suit.
4. The 1st defendant filed a written statement denying the averments made in the plaint and contending that he did not borrow either Rs.67,000/- or Rs.2,14,000/- from the plaintiff. Instead, he acknowledged borrowing Rs.10,000/- on 18.12.1996, and a promissory note was executed for this amount. Subsequently, when the outstanding amount under this promissory note reached Rs.23,733/- by 18.02.2000, the plaintiff obtained a promissory note for an increased amount of Rs.35,172/- in the name of his sister, Kambala Venkata Padmavathi. The renewed promissory note dated 18.02.2000 amounted to Rs.67,336/- by 24.02.2003, and the plaintiff waived his claim for Rs.336/-, ultimately obtaining the 1st suit promissory note for Rs.67,000/-. The 1st defendant asserted that he, the plaintiff and Lankapothu Padmanabha Reddy, are close relatives. Therefore, the plaintiff did not insist on the defendant executing the promissory note in the renewal of the earlier one dated 03.04.1993 until 03.04.2000. During this period, the plaintiff obtained a promissory note for Rs.1,12,688 from the defendant, as if he had borrowed this amount in the name of his brother, Lankapothu Padmanabha Reddy. On 28.03.2003, the amount claimed to be due under the earlier promissory note dated 03.04.2000 was Rs.2,14,000/-. The plaintiff obtained a promissory note in his name 3 TMR, J A.S.No.297 of 2013 as if the defendant borrowed Rs.2,14,000/- from him on that date. The 1st defendant, being an agriculturist and not an Income Tax Assessee, argued that he is entitled to the benefits of the provisions of the A.P.Agriculturist Relief Act, 1938. He contended that the suit debt should be scaled down accordingly. The defendant also claimed that the plaintiff is entitled only to simple interest at the rate of 12% per annum on the amounts of Rs.10,000/- and Rs.25,000/-, which he borrowed from the plaintiff on 18.02.1996 and 03.04.1993, respectively, until the date of the suit. Finally, the defendant asserted that the suit is barred by limitation since there is no written acknowledgment for the payment of the time-barred debt.
5. The defendants 2 and 3 adopted the written statement of the 1st defendant.
6. A perusal of the orders in I.A. No.261/2010, dated 13.07.2010, the defendants 2 to 4 were added as legal heirs of the deceased 1st defendant, and the suit against the 4th defendant is dismissed as batta not paid.
7. Based on the above pleadings, the trial Court framed the issues:
1) Whether the suit promissory notes dated 24.02.2003 and 28.03.2003 are true?
2) Whether those two pronotes are not supported by consideration?
3) Whether the plaintiff is entitled to the benefits and provisions of the Andhra Pradesh Agriculturists Relief Act, 1938?
4) Whether the plaintiff is entitled to a decree for the suit amount?
5) To what relief?4
TMR, J A.S.No.297 of 2013
8. During the trial, on behalf of the plaintiff, P.Ws.1 and 2 were examined, and Exs.A1 to A3 were marked. On behalf of the defendants, D.Ws 1 and 2 were examined. Though the 2nd and 3rd defendants were added as legal heirs of the 1st defendant, they were not examined; Exs.B1 to B4 and Exs.X1 to X4 were marked on their behalf.
9. Having considered the materials placed before him, the learned Senior Civil Judge, Bapatla, decreed the suit with costs against the defendants 2 and 3 out of the estate of the deceased 1st defendant, which is lying in the hands of D.2 to D.4, for Rs.3,76,573/-with subsequent interest @ 12% per annum from the date of filing of the suit, till the date of decree and future interest at 6% per annum from the date of decree, till the date of realization on the principal amount of Rs.2,81,000/-.
10. Sri Raja Reddy Koneti, learned counsel for the appellants/defendants, contends that the trial Court did not adequately consider the discrepancy in the plaintiff's claim that he had withdrawn the money from the bank on the dates of the promissory notes and paid it to the defendants. The bank transaction records do not support this claim, and this inconsistency should have been taken into account. The 1st defendant contends that the suit promissory notes are merely renewals of earlier promissory notes and that no new consideration was exchanged under the suit promissory notes. To support this claim, he has presented evidence by marking 5 TMR, J A.S.No.297 of 2013 the returned or earlier promissory notes. Therefore, the suit should not be decreed. The counsel further argues that the trial Court failed to recognize that the 1st defendant has established that no consideration was passed under the suit promissory notes, and they are simply renewals of previous promissory notes. Consequently, the presumption under Section 118 of the Evidence Act, which assumes that negotiable instruments are supported by consideration, should be rebutted. He asserts that the plaintiff failed to prove that consideration was indeed passed under the promissory notes, while the appellants have provided evidence indicating that no consideration was exchanged under the suit promissory notes. As a result, the plaintiff's claim should have been dismissed.
11. Per contra, Sri Sreekanth Reddy Ambati, learned counsel for the respondent/plaintiff, contends that the trial Court correctly appreciated the case facts and came to a correct conclusion. The reasons given by the trial Court do not require any interference.
12. Considering the pleadings in the suit, the findings recorded by the trial Court and in light of the rival contentions and submissions made, the following points would arise for determination:
1) Is the trial Court justified in holding that the suit promissory notes are supported by consideration and the part payment is true?
2) Is the trial Court justified in holding that the interest is not liable to be scaled down from the date of the suit transaction till the date of filing?
3) Is the Judgment passed by the trial Court needs any interference?6
TMR, J A.S.No.297 of 2013 POINT NO.1:
13. The plaintiff is examined as P.W.1; the 1st defendant is examined as D.W.1. P.W.1 and D.W.1 reiterated their stand in their respective pleadings. The plaintiff examined the attestor of the Exs.A1 and A2 promissory notes as P.W.2-L.Padmanabha Reddy, who is the plaintiff's brother. PWs.1 and 2 testified that the 1st defendant borrowed Rs.67,000/- from the plaintiff on 24.02.2003 and executed a suit promissory note (Ex.A.1). It is also their evidence that the 1st defendant borrowed Rs.2,14,000/- from the plaintiff on 28.03.2003 and executed Ex.A2 promissory note, agreeing to the terms and conditions therein. The P.W.2's evidence coupled with Exs.A1 and A2 promissory notes show that he attested both promissory notes.
14. The D.W.1's evidence shows that one Smt. Kambala Venkata Padmavati, who is the sister of P.Ws 1 and 2, and they are closely related to him. It is the DW.1's evidence that he borrowed Rs.25,000/- on 03.04.1993 under a promissory note, but the promissory note related to this transaction needs to be located. Whereas, in the written statement, the DW.1 has contended that he borrowed Rs.25,000/- on 03.04.1993 from the plaintiff due to their relationship and confidence, the DW.1 did not insist on executing a promissory note in the renewal of an earlier promissory note dated 03.04.1993 till 03.04.2000, on which date the plaintiff obtained promissory note for Rs.1,12,688/- from the 1st defendant, as if the 1st defendant borrowed 7 TMR, J A.S.No.297 of 2013 the said amount in the plaintiff's brother' s name Padmanabha Reddy (P.W.2). When the 1st defendant was asked to execute two promissory notes, it is somewhat strange to contend that the plaintiff did not insist the 1st defendant to execute the promissory note in renewal of earlier promissory note dated 03.04.1993 till 03.04.2000.
15. It is also the DW.1's evidence that he borrowed Rs.10,000/- on 18.02.1996 from the plaintiff under a promissory note. By 18.02.2000, when the amount due under the aforementioned promissory notes was Rs.23,733/-, the plaintiff obtained a promissory note for Rs.35,172/- in the name of his sister/K. Venkata Padmavati. By 24.02.2003, when the amount under the renewed promissory note, dated 18.02.2000 was Rs.67,336/-, the plaintiff obtained an Ex.A1 suit promissory note for Rs.67,000/- in his name. The defendant relied on Ex.B1 - a returned renewal promissory note, dated 18.02.2000, which stands in favour of L.Padmanabha Reddy for Rs.35,172/- and Ex.B2 - a promissory note dated 18.02.2000 executed by the 1st defendant in favour of Kambala Venkata Padmavathi. Exs.B1 and B2 lack endorsements or signatures to indicate that the 1st defendant retrieved these promissory notes from the respective individuals, to whom they were initially made out. They do not bear the signatures of the attesors and are said to have been self scribed by the (DW.1) 1st defendant. D.W.1's contentions regarding the execution of Exs.B.1 and B.2 are unsupported by oral 8 TMR, J A.S.No.297 of 2013 or documentary evidence. It becomes difficult to accept DW.1's testimony without corroborating evidence.
16. The 1st defendant's stand as articulated in both his written statement and his testimony is that he executed Exs.A1 and A2 promissory notes in his own handwriting in favour of PW.1. These promissory notes state that he borrowed the amounts for his agriculture cultivation expenses. Importantly, Ex.A1 and Ex.A2 do not mention that they were executed in renewal of any prior promissory notes. However, the 1st defendant's assertion that he did not actually receive the consideration amount for these promissory notes is based solely on his own testimony. There is no supporting evidence, such as, receipts from Kambala Venkata Padmavathi or discharge endorsements on Ex.B.2 to corroborate his stand. D.W.1's evidence also reveals that he practiced as an advocate for a brief period, approximately six months, in 1976, and subsequently, engaged in a pesticides business in Guntur from 1978 to 1986, during which time, he was an Income Tax Assessee. However, he ceased his business operations in 1986. Notably, there were no disputes between his family and P.W.1's family. Crucially, D.W.1's testimony regarding these matters was not significantly challenged during cross- examination. His evidence confirms that he was not engaged in any business at the time of the suit transactions, which occurred in 2003. Moreover, his brief legal practice experience in 1976 was also 9 TMR, J A.S.No.297 of 2013 uncontested. Finally, Exs.A1 and A2 indicate that the 1st defendant borrowed the amounts for agricultural purposes.
17. Since the appellants/defendants admitted the execution of Ex.A1 and Ex.A2 promissory notes, the burden is upon them to establish that the 1st defendant had executed without consideration.
18. The evidence of P.W.s 1 and 2 manifestly establishes the execution of suit promissory notes Ex.A1 and Ex.A2 by the 1st defendant. It is not the defendants' case that they had enmity with the plaintiff, but the evidence shows that they are close relatives. Though the 1st defendant took a plea that Ex.A1 and Ex.A2 suit promissory notes were executed in renewal of earlier promissory notes, he failed to establish the same by placing cogent evidence.
19. In Duggineni Seshagirirao V. K.Venkatarao1, in the facts and circumstances of the case, the composite High Court of Andhra Pradesh held that:
"....the plaintiff had been able to prove the execution of the document. If the document was disputed or doubted the onus was on the defendant to show that the document was forgery because the presumption in favour of the plaintiff under Section 118 of Negotiable Instrument Act".
20. In Bonalaraju V. S. Sarupula Srinivas2, the composite High Court of Andhra Pradesh held that:
"once execution is proved the presumption under Section 118 of N.I. Act that it is supported by consideration automatically applies and the contention that the plaintiff is not only to establish the execution but also establish passing on the consideration is rejected".1
2001(6) ALT 95 2 2006(2) ALD202 10 TMR, J A.S.No.297 of 2013
21. In a decision G. Vasu V. Syed Yaseen Sifuddin Quadri3, the Composite High Court of Andhra Pradesh held that:
"Once the defendant shows either by direct evidence or circumstantial evidence or by use of other presumptions of Law or the fact that the promissory note is not supported by consideration in the manner stated in the promissory note or the manner stated in the suit notice or the pleading, the evidential burden shifts to the plaintiff and the legal burden of the plaintiff is revived, i.e., to prove that the promissory note is supported by consideration and at that stage. The presumption of Law covered by S.118" disappears and no longer subsists".
"It is further held that once both parties have adduced evidence the Court has to consider the same and the burden of proof loses all its importance".
22. In Abbisetti Krishnamoorthy V. Singasani Raghuramaiah (died) per L.R.s4, the composite High Court of Andhra Pradesh held that:
"Section 118 of the N.I Act shows that the presumption attached to passage of consideration (as is the subject matter of this Appeal) just like other presumption also is clearly rebuttable and it is for the defendant to satisfy the Court that in a given case, the presumption cannot be drawn".
In light of the principles laid down in the above decisions, I now consider the facts of the case.
23. Such being the position of Law, the burden lies on the defendants to prove the non-existence of consideration by bringing on record such facts and circumstances, which would lead the Court to believe the non-existence of the consideration. If the defendants discharge the onus of proof showing that the existence of consideration was improbable or doubtful and also the execution of the promissory note, the onus would be shifted to the plaintiff. Then, he will be obliged to prove the existence of the consideration. 3 AIR 1987 A.P. 139 Full Bench 4 2011(5) ALT 143 11 TMR, J A.S.No.297 of 2013
24. Regarding the evidence, which is adverted to supra, this Court views that the defendants did not show satisfactory and reliable evidence or circumstance to disbelieve the evidence of P.W.s 1 and 2 regarding the execution of the promissory note by the 1st defendant and passing of consideration. The evidence of P.W.s 1 and 2 is consistent regarding the execution of the promissory notes by the 1st defendant on receipt of the consideration amount and part payment endorsement. Though P.W.s 1 and 2 were subjected to lengthy cross- examination, nothing was elicited to discredit their evidence. The plaintiff and his witness have no reason to fabricate the suit promissory note. PW.2 has no reason to depose falsehood against the 1st defendant's interest, and he would gain nothing by supporting the plaintiff's case unless there is a truth in it. However, even the rebuttal could be given by direct evidence or by proving the preponderance of probabilities on record. In the present case, the defendants have not rebutted the presumption, even by the preponderance of probabilities.
25. On studied scrutiny, it is seen that the defendants have not produced any evidence to discharge the onus on them. The defence taken by the defendants is not substantiated. The presumption under section 118 of the Negotiable Instruments Act 1881 is a statutory one, and unless it is rebutted, it has to be presumed that consideration has passed.
26. The upshot of the discussion above is that the plaintiff is able to establish the execution of the suit promissory notes in his favour by 12 TMR, J A.S.No.297 of 2013 the 1st defendant after receipt of the consideration amount there under. Accordingly, this point is answered in favour of the plaintiff by holding that the Trial Court is justified in holding that the 1st defendant executed the suit promissory notes, received the consideration amount and made part payment. Accordingly, this point is answered.
POINT NOs.2& 3:
27. As seen from the plaint, the plaintiff claimed interest at 24% per annum from the date of suit transactions till the date of filing of the suit. The evidence on record shows that the 1st defendant borrowed the amount for agricultural purposes under Ex.A1 and Ex.A2 transactions, and he was eking out his livelihood by agriculture as of the date of suit transactions.
28. In a decision reported in Vinjarapu Nookaraju and another vs. Palaparthi Yedukondalu5, the Composite High Court of Andhra Pradesh observed that:
"4.xxx In this case it is necessary to notice that Section 13 of the Andhra Pradesh (Andhra Area) Agriculturists Relief Act 4 of 1938 which empowers the Government to notify altering the rate of interest payable from time to time. The said notification under Sec.13 was issued on 06.10.77 as per A.P. Gazettee, R.S. to Part-II dated 06.10.77."
29. In a decision reported in Kota Venkaiah Choudary vs Ramineni Venkata Subba Rao, the Composite High Court of Andhra Pradesh held that:
"5. xxx Section 13 of Act 4 of 1938 reads as under: 51984 SCC OnLine A.P. 86 13 TMR, J A.S.No.297 of 2013 Rate of interest payable by agriculturists on new loans: In any proceeding for recovery of a debt, the Court shall scale down all interest due on any debt incurred by an agriculturist after the commencement of this Act so as not to exceed a sum calculated at 6¼ per cent per annum, simple interest, that is to say, one pie per rupee per mensem simple interest or one anna per rupee per annum simple interest;
It provided that the State Government may, by notification in the Official Gazette, alter and fix any other interest rate from time to time.
6. A plain reading of the above provision would show that though the legislature prohibited the levy of interest above 6¼ per annum on any amount borrowed by an agriculturist, power was reserved to the Government to modify such interest rate. In the exercise of such power, the Government issued G.O.Ms.No.693, dated 22.09.1977. It issued a notification in A.P. Gazette Part-II dated 06.10.1977 increasing the interest rate to 12.5% per annum with effect from 06.10.1977".
30. Section 13-A of Act 4 of 1938, which reads as under:
13-A. Rate of interest payable by certain persons on debts: Where a debt is incurred by a person who would be an agriculturist as defined in section 3(ii) but for the operation of proviso (B) or proviso (C) to that section, the rate of interest applicable to the debt shall be the rate applicable to it under the law custom, contract or decree of Court under which the debt arises or the rate applicable to an agriculturist under section 13 whichever rate is less.
31. By following the above case law and provisions, this Court finds that the trial Court should have awarded the interest at the rate of 12.5% per annum from the date of suit transactions till the date of filing of the suit on respective amounts borrowed under Exs.A1 and A2 promissory notes.
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TMR, J A.S.No.297 of 2013
32. Accordingly, these points are answered in favour of the plaintiff. Given the preceding discussion, the view taken by the trial court does not call for any interference except the rate of interest.
33. As a result,
(a) The Appeal is partly allowed without costs;
(b) The suit in O.S. No.96 of 2004 on the file of learned Senior Civil Judge Bapatla is partly decreed with costs;
(c) Defendants 2 and 3 shall pay a sum of Rs.67,000/- and Rs.2,14,000/- with interest at 12.5% per annum from the date of suit promissory notes dated 24.02.2003 and 28.03.2003, respectively, till the date of filing of the suit and thereafter interest at 12% per annum till the date of decree and further at 6% per annum from the date of decree till realisation with proportionate costs. Miscellaneous petitions pending, if any, in this Appeal, shall stand closed.
________________________________ JUSTICE T. MALLIKARJUNA RAO Date: 22.09.2023 MS 15 TMR, J A.S.No.297 of 2013 THE HON'BLE SRI JUSTICE T.MALLIKARJUNA RAO APPEAL SUIT NO.297 OF 2013 Date:22.09.2023 MS