Chillakuru Subbarami Reddy, vs Vanjavaka Surendra Reddy,
2021 Latest Caselaw 3121 AP

        HON'BLE SRI JUSTICE M. VENKATA RAMANA

              SECOND APPEAL No.210 OF 2021

JUDGMENT:

The defendant is the appellant.

2. The respondent instituted the suit based on promissory

note dated 13.5.2002 stating that the appellant borrowed an

amount of Rs.1,50,000/- from the respondent agreeing to repay

the same with interest at 24% p.a., at yearly rests on his

demand. It is the further case of the respondent that on

12.5.2005 and on 10.5.2008, Rs.5,000/- and Rs.6,000/- were

the part-payments made by the appellant towards this

promissory note debt and thereafter he failed to repay the

amount due despite issuance of the legal notice and demands

made by the respondent.

3. Thus, a claim for Rs.7,38,396/- was made by the

respondent against the appellant.

4. The appellant resisted the claim of the respondent mainly

contending that he had borrowed Rs.45,000/- from one Sri

Puchalapalli Sudhakar Reddy in or about the year 1996 and the

respondent, who is his close relative, had lent his name in this

transaction, in whose name the promissory note was obtained.

Further defence of the appellant was that interest was

calculated at 24% p.a., on yearly rests and as on 13.5.2002 he

had executed the promissory note in the name of the respondent

at request of Sri Sudhakar Reddy. Thus, he contended that the

suit promissory note is not supported by consideration.

5. The appellant also contended that the payment

endorsements on the suit promissory note are forged and

therefore, the suit is barred by limitation, since the claim was

not presented within the time. He further contended that the

interest claimed is usurious, penal and he being an agriculturist

it should be scaled down.

6. The trial Court, based on the pleadings, settled the

following issues for trial:

1) Whether the part payment dated 12.5.2005 and 10.5.2008 are forged one?

2) Whether the promissory note is not supported by consideration?

3) Whether the suit is barred by limitation?

4) Whether the defendant is an agriculturist entitled to the benefits of Act IV of 1938?

5) Whether the plaintiff is entitled for the suit amount, as prayed for?

6) To what relief?

7. The parties lead the evidence at the trial where P.W.1 was

the respondent, P.W.2 was supposed to be the Scribe of

payment endorsements and P.W.3 being the Attestor to the last

endorsement dated 10.5.2008, while the respondent relied on

Ex.A.1 to A.3. The appellant examined himself as D.W.1 and no

other evidence was let in on his behalf including documentary

evidence.

8. Basing on the material, learned trial Judge upheld the

claim of the respondent, applying the presumption under

Section 118 of the Negotiable Instruments Act in relation to

Ex.A.1 Promissory note and as a consequence the trial Court

also held that the payment endorsements under Ex.A.2 and A.3

were made by the appellant relying on Section 73 of the

Evidence Act. However, on the premise that the appellant failed

to prove that he being an agriculturist, the benefit under Act IV

of 1938 was not applied, though the trial Court observed that

the respondent failed to prove that he is entitled for

compounding interest on the amount borrowed under the suit

promissory note. Thus the claim at 24% p.a., was permitted by

the trial Court.

9. In the appeal preferred by the appellant, the appellate

Court substantially agreed with the findings recorded by the

learned trial Judge, for identical reasons and dismissed the

appeal.

10. In this Second Appeal, Sri T.D.Phani Kumar, learned

Counsel for the appellant, contended that there is no proof in

relation to payment endorsements under Exs.A.2 and A.3 and

therefore, the suit claim is barred by time. Contending that the

Courts below are not right in considering the plea of the

respondent in relation to Ex.A.1 promissory note, in applying

the presumption under Section 118 of the Negotiable

Instruments Act, and pointing out that the contents of Ex.A.1

Promissory note did not meet the requirements of Section 20 of

the Negotiable Instruments Act, learned counsel requested to

consider the substantial questions of law stated in the Grounds

of Appeal.

11. Sri C.Subhash, learned counsel for the respondent,

argued in this matter, at the stage of admission.

12. Now it has to be seen whether this case requires

consideration under Section 100 CPC in terms of substantial

questions of law raised by the appellant and their

determination. Incidentally, having regard to the nature of the

suit transaction it should also be determined whether

interference of this Court is required in respect of extent of

interest claimed by the respondent and if it is desirable to scale

down, in the interest of justice being usurious.

13. Execution of Ex.A.1 Suit promissory note is clearly

admitted by the appellant in his written statement. Though it

sets out certain circumstances that he has borrowed about

Rs.45,000/- from P.W.2-Sri Puchalapalli Sudhakar Reddy in the

year 1996 and that the suit promissory note is renewal of the

same, upon calculating the interest at 24% p.a., with yearly

rests, except his interested testimony there is no other material

placed by him or offering independent support in relation

thereto, at the trial.

14. When once execution of Suit promissory note is admitted,

the burden of proof rests on the borrower to prove that the Suit

promissory note is not supported by consideration or it was

executed in those circumstances which reflect that it is devoid of

consideration in terms of Section 118 of Negotiable Instruments

Act. This presumption is in relation to passing of consideration

under negotiable instrument. No such rebuttal evidence was

placed at the trial.

15. Therefore, both the Courts consistently held that the plea

so set up by the appellant is not established. Being a pure

question of fact, this Court should necessarily go by these

consistent findings of the Courts below and even otherwise,

those findings are in accordance with law calling for no

interference at this stage.

16. In respect of payment endorsements dated 12.5.2005 and

10.5.2008 in Exs.A.2 and A.3 respectively on Ex.A.1 Suit

promissory note, the burden is on the respondent to establish

the said transactions. Apart from the evidence of the respondent

as P.W.1, both the Courts below considered the testimony of

P.W.2 who is stated to be the Scribe of these endorsements and

P.W.3 being the Attestor to Ex.A.3 endorsement. Both the

Courts below found that their testimony is acceptable being

consistent and offering support to the testimony of P.W.1 as no

abnormality in the testimony of P.Ws.2 and 3.

17. When once the appellant raised a plea of forgery, it is for

him to make out the circumstances in all probability under

which these endorsements could have been brought out and

that they are an outcome of the same.

18. No steps were taken to subject these two endorsements

particularly with reference to signature of the appellant thereon

for any scientific examination to a Handwriting Expert.

19. Except the interested testimony of the appellant, there is

no other material on record to support such defence of the

appellant. Contra to it, there is acceptable testimony of P.Ws.1

to 3, which both the Courts below considered in right

perspective. This is also a pure question of fact on which the

Courts below recorded consistent findings concurrently.

Therefore, even this question did not fall within the purview of

Section 100 CPC.

20. Therefore, the inference drawn now is that Exs.A.1 to A.3

transactions were established at the trial and the findings

recorded by the learned trial Judge on reappraisal were

accepted by the learned appellate Judge. Therefore, there is no

reason to interfere at this stage in this Second Appeal on these

findings recorded basing on facts.

21. However, a disturbing feature in this Ex.A.1 transaction is

the abnormal rate of interest claimed by the respondent against

the appellant, at 24% p.a., with yearly rests. The plaint depicts

such a situation. A specific defence is raised by the appellant in

this context stating that he is an agriculturist and that the rate

of interest claimed is usurious, while also invoking the benefits

under Act IV of 1938.

22. Both the Courts below did not accept the version of the

appellant as an agriculturist for simple reason that in Ex.A.1

Suit promissory note he is not described as an agriculturist.

23. This promissory note does not indicate that the appellant

had borrowed the amount mentioned therein either for his own

necessities or for business purposes. The appellate Court

recorded that there was attachment before judgment of the

agricultural lands belonging to the appellant. This fact is

sufficient to hold that the appellant owned agricultural lands

and thereby, he falls within the purview of Act IV of 1938 as

applicable in the State of Andhra Pradesh and to conclude that

he was an agriculturist in the absence of any contra material.

24. Further, in terms of Section 3 of the Usurious Loans Act,

when the rate of interest claimed in a transaction is strikingly

unreasonable and cannot be permitted being unconscionable,

the Court has a duty to scale it down.

25. Apart from specific plea in the written statement, there is

also material to hold that the appellant on the date of the suit

transaction was an agriculturist. Indeed, there is no rebuttal as

to his status likewise from the respondent. These circumstances

are sufficient to reduce the rate of interest so claimed in the

suit.

26. If the rate of interest is considered at 12% p.a., reopening

the suit transaction and directing that the interest be computed

at such rate from the date of the suit transaction viz., 13.5.2002

till the date of filing the suit and thereafter at 12% p.a., till

passing the decree, followed by 6% p.a., on the adjudged

amount, in terms of Section 34 CPC, it meets the ends of

justice.

27. Therefore, in relation to the rate of interest claimed by the

respondent against the appellant, it is required to interfere, in

the circumstances stated above.

28. Therefore, this Second Appeal is allowed in part, at the

stage of admission, modifying the decrees of the Courts below in

the following terms:

1) That the appellant shall pay Rs.1,50,000/- to the respondent being the principal.

2) That the appellant shall pay interest at 12% p.a., on Rs.1,50,000/- from the date of Suit promissory note viz., 13.5.2002 till 28.5.2011 (date of presentation of the claim) and that at 12% p.a., on Rs.1,50,000/- from 29.5.2011 till 29.3.2016 (date of decree).

3) That on the adjudged amount so arrived at in terms of Section 34 CPC, the appellant shall pay the interest at 6% p.a., from 30.3.2016 till realisation.

Rest of the claim of the respondent accordingly stands

dismissed and the suit stands decreed in the above terms with

proportionate costs payable by the appellant/defendant to the

respondent/plaintiff. The respondent is also entitled for

proportionate costs in the first appeal as well as in the Second

Appeal. All pending petitions stand closed.

___________________________ M. VENKATA RAMANA, J August 23, 2021 vasu